Corporate report

DLUHC annual report and accounts 2022 to 2023: Accountability report

Updated 14 December 2023

Accountability report

Introduction

The Accountability Report is included to meet key accountability requirements to Parliament. It is structured as follows:

Corporate governance report

The Directors’ report

Our Departmental Board

During 2022-23 the department consisted of the core department and thirteen other arm’s length bodies (ALBs). Note 23 of the accounts provides a full list of public bodies sponsored by the department and identifies those that are consolidated into the accounts of the Departmental Group (‘the Group’).

The Departmental Board, comprising of Ministers, Non-Executive Directors, the Permanent Secretary, and the Chief Financial Officer, met two times in the year rather than quarterly, owing to ministerial changes following the Machinery of Government (MoG) change. Each member’s attendance at Departmental Board meetings is noted below. The Board’s role is to provide collective strategic and operational leadership for the department’s business. It supervises five key areas: strategic clarity; commercial sense; talented people; results focus; and management information. The department also has a Non-Ministerial Board which met four times in 2022-23. The Non-Ministerial Board is chaired by the Lead Non- Executive Director. It is attended by the Executive Team and Non-Executive Directors. Its role is to review the department’s capability to deliver its priorities and to scrutinise and advise on key performance measures to drive delivery and improvements.

Further details of Ministers’ areas of responsibility, the department’s Non-Executive Directors and the Executive Team can all be found at: https://www.gov.uk/government/organisations/department-for-levelling-up-housing-and-communities.

Our Ministers as at 31 March 2023^{[footnote 1]}

The Rt Hon Michael Gove MP

Secretary of State for Levelling Up, Housing, and Communities and Minister for Intergovernmental Relations. Chair of the Departmental Board

From 25 October 2022

Attended 2 of 2 board meetings

Rachel Maclean MP

Minister of State for Housing and Planning

From 07 February 2023

Attended 1 of 2 board meetings^{[footnote 2]}

Deheena Davison MP

Parliamentary Under Secretary of State for Levelling Up

From 07 September 2022^{[footnote 3]}

Attended 1 of 2 board meetings

Lee Rowley MP

Parliamentary Under Secretary of State for Local Government and Building Safety

From 07 September 2022^{[footnote 4]}

Attended 1 of 2 board meetings

Felicity Buchan MP

Parliamentary Under Secretary of State for Housing and Homelessness

From 30 October 2022^{[footnote 5]}

Attended 1 of 2 board meetings

Baroness Scott of Bybrook OBE

Parliamentary Under Secretary of State for Faith and Communities (Lords)

From 20 September 2022^{[footnote 5]}

Attended 1 of 2 board meetings

Our Non-Executive Directors

Dame Alison Nimmo DBE

Lead Non-Executive Director

From 31 March 2022

Attended 2 of 2 board meetings

Thomas Taylor

Non-Executive Director^{[footnote 5]}

Attended 1 of 2 board meetings

Pam Chesters CBE

Non-Executive Director

Attended 2 of 2 board meetings

Lord Gary Porter CBE

Non-Executive Director

From 7 June 2021

Attended 2 of 2 board meetings

Jeffrey Dodds

Non-Executive Director

From 12 April 2021

Attended 1 of 2 board meetings

Our Executive Directors

Sarah Healey CB CVO^{[footnote 6]}

Permanent Secretary

Attended 0 of 2 board meetings

Emran Mian CB OBE^{[footnote 7]}

Director General, Regeneration

Matt Thurstan

Director General, Chief Financial Officer and Corporate

Attended 2 of 2 board meetings

Catherine Frances^{[footnote 8]}

Director General, Local Government, Resilience and Communities

Attended 2 of 2 board meetings

Will Garton^{[footnote 9]}

Director General, Levelling Up

Attended 1 of 2 board meetings

Richard Goodman^{[footnote 10]}

Director General, Safer & Greener Buildings

Attended 0 of 2 board meetings

Brendan Threlfall^{[footnote 11]}

Director General, Union and Devolution

Attended 0 of 2 board meetings

Jo Rodrigues^{[footnote 12]}

Director, People, Capability and Change

Attended 0 of 2 board meetings

Kate O’Neill^{[footnote 13]}

Director of Strategy

Attended 0 of 2 board meetings

Other Ministers who served in the department during 2022-23 were:

• MP Simon Clarke, Secretary of State for Housing, Communities, and Local Government, from 6 September 2022 to 25 October 2022. Attended no board meetings.

• MP Lucy Frazer, Minister of State for Housing and Planning at the Department for Levelling Up, Housing and Communities from 26 October 2022 to 7 February 2023. Attended one board meeting.

• MP Marcus Jones, Minister of State for Housing and Planning at the Department for Levelling Up, Housing and Communities from 8 July 2022 to 7 September 2022. Attended no board meetings.

• MP Stuart Andrew, Minister of State for Housing and Planning at the Department for Levelling Up, Housing and Communities from 8 February 2022 to 6 July 2022. Attended one board meeting.

• MP Lia Nici, Parliamentary Under-Secretary of State for Levelling Up, The Union and Constitution at the Department for Levelling Up, Housing and Communities from 8 July 2022 to 20 September 2022. Attended no board meetings.

• MP Neil O’Brien, Parliamentary Under-Secretary of State for Levelling Up, The Union and Constitution at the Department for Levelling Up, Housing and Communities from 17 September 2021 to 6 July 2022. Attended one board meeting.

• MP Paul Scully, Minister of State for Local Government and Building Safety at the Department for Levelling Up, Housing and Communities from 8 July 2022 to 27 October 2022. Attended no board meetings.

• MP Kemi Badenoch, Minister of State at the Department for Levelling Up, Housing and Communities from 16 September 2021 to 6 July 2022. Attended one board meeting.

• MP Andrew Stephenson, Parliamentary Under-Secretary of State for Housing and Communities at the Department for Levelling Up, Housing and Communities from 20 September 2022 to 27 October 2022. Attended no board meetings.

• MP Eddie Hughes, Parliamentary Under-Secretary of State for Housing and Rough Sleeping at the Department for Levelling Up, Housing and Communities from 16 January 2021 to 8 September 2022. Attended no board meetings.

• Stephen Greenhalgh, Minister of State for Building Safety and Fire at Department for Levelling Up, Housing and Communities from 18 March 2020 to 8 July 2022. Attended one board meeting.

Other Non-Executive Directors who served in the department during 2022-23 were:

• Dame Mary Ney DBE, Non-Executive Director from October 2016 to October 2022. Attended one board meeting.

Other Executive Directors who served in the department during 2022-23 were:

• Jeremy Pocklington, Permanent Secretary from 30 March 2020 7 February 2023. Attended two board meetings.

• Simon Claydon, Director of People, Capability and Change from 7 June 2021 to 1 May 2023. Attended no board meetings.

• Kay Withers, Director of Strategy from 31 January 2022 to 10 November 2022. Attended one board meeting.

• Simon Ridley, Second Permanent Secretary from 1 April 2022 to 18 April 2023. Attended one board meeting.

• Sue Gray, Second Permanent Secretary for Cabinet Office from 24 May 2021 to 2 March 2023. Attended one board meeting.

Directorships and Significant Interests

Details of directorships and other significant interests held by Ministers are set out in the List of Ministers’ Interests which are available on https://www.gov.uk/government/publications/list-of-ministers-interests and the Register of Members’ Financial Interests held on the UK Parliament website at: https://www.parliament.uk/mps-lords-and-offices/standards-andfinancial-interests/parliamentary-commissioner-for-standards/registers-of-interests/register-of-members-financial-interests. Details of directorships and other significant interests held by members of the Board can be found at https://www.gov.uk/government/publications/dluhc-register-of-board-members-interests. The Department provides information to individuals who hold appointments in outside organisations where a conflict of interest might arise or might be perceived.

Related Party Transactions & Conflicts of Interest

The names and titles of all Ministers and Related Parties who had responsibilities for the Department during the year, are provided above. All potential conflicts of interest for Non-Executive board members are considered on a case by case basis. Where necessary, measures are put in place to manage or resolve potential conflicts. The Board has agreed and documented an appropriate system to record and manage conflicts and potential conflicts of interest of board members. Any significant Related Party Transactions associated with the interests of Ministers or Board members, are shown in Note 21 – Related Party Transactions.

Auditor

The core, agency, arm’s length bodies and group accounts have all been audited by the Comptroller and Auditor General (C&AG) with the exception of the Leasehold Advisory Service which is audited by Beever & Struthers. Further details are given in the accounts of the bodies concerned. The total cost of the audit across the Departmental Group is £1,357,000 of which £845,000 is a cash charge and £512,000 is a notional charge (2021-22: £1,100,000 of which £640,000 was a cash charge and £460,000 was a notional charge).

The audit fee for the core department is £375,000 (2021-22: £330,000), broken down as £350,000 for the departmental audit, £10,000 for the cost of consolidation work and £15,000 for the departmental audit of the Whole of Government Accounts submission made by the department to HM Treasury. The increase reflects the requirements of new audit standards.

In addition, the department meets the costs for audit of the Business Rates-related accounts. The fees are all notional charges and are included in the group accounts. The fees on these audits are as follows:

• Main Rating Account: £43,000 (2021-22: £41,000)

• Levy Account: £9,000 (2021-22: £8,500)

• Trust Statement: £21,500 (2021-22: £20,500)

The National Audit Office performed other statutory audit work, including value for money studies and investigation work for Parliament, wider lesson learning and good practice guides and also products aimed at audit committees at no cost to the department.

Personal Data Related Incidents

The department, its executive agency and arm’s length bodies manage a range of data which relates to staff and citizens, most of which is used to support policy analysis and review and does not allow the identification of individuals. Procedures and processes are in place to protect information and data and to ensure it is only used for the purposes for which it was collected. For further information on the department’s response to data related incidents, refer to Information Security on page 61.

Statement of Accounting Officer’s Responsibilities

Under the Government Resources and Accounts Act 2000 (the GRAA), HM Treasury has directed the Department for Levelling Up, Housing and Communities to prepare, for each financial year, consolidated resource accounts detailing the resources acquired, held or disposed of, and the use of resources during the year by the department (inclusive of its executive agency) and its sponsored non-departmental and other arm’s length public bodies designated by order made under the GRAA by Statutory Instrument 2022 number 1319 (together known as the ‘Departmental Group’, consisting of the department and bodies listed in Note 23 to the accounts). The accounts are prepared on an accruals basis and must give a true and fair view of the state of affairs of the department and the Departmental Group and of the income and expenditure, Statement of Financial Position and cash flows of the Departmental Group for the financial year.

In preparing the accounts, the Accounting Officer of the department is required to comply with the requirements of the Government Financial Reporting Manual (FReM) and in particular to:

• observe the Accounts Direction issued by HM Treasury, including the relevant accounting and disclosure requirements, and apply suitable accounting policies on a consistent basis;

• ensure that the department has in place appropriate and reliable systems and procedures to carry out the consolidation process;

• make judgements and estimates on a reasonable basis including those judgements involved in consolidating the accounting information provided by non-departmental and other arm’s length public bodies;

• state whether applicable accounting standards, as set out in the FReM, have been followed, and disclose and explain any material departures in the accounts;

• prepare the accounts on a going concern basis; and

• confirm that the Annual Report and Accounts as a whole is fair, balanced and understandable and take personal responsibility for the Annual Report and Accounts and the judgements required for determining that it is fair, balanced and understandable.

HM Treasury has appointed me, Sarah Healey CB CVO, the Permanent Head of the department as Accounting Officer of the Department for Levelling Up, Housing and Communities. The majority of this report relates to a period when I was not the Accounting Officer. My predecessor, Jeremy Pocklington CB, left in February 2023 and I was appointed on 7 February 2023. I met with my predecessor and received appropriate assurances that the system of internal controls was sound and effective prior to my appointment as Accounting Officer. Therefore, I consider that I have sufficient knowledge to take responsibility for this statement.

The Accounting Officer of the department has also appointed the Chief Executives or equivalents of its sponsored non‑departmental and other arm’s length public bodies as Accounting Officers of those bodies. The Accounting Officer of the department is responsible for ensuring that appropriate systems and controls are in place to ensure that any grants that the department makes to its sponsored bodies are applied for the purposes intended and that such expenditure and the other income and expenditure of the sponsored bodies are properly accounted for, for the purposes of consolidation within the resource accounts. Under their terms of appointment, the Accounting Officers of the sponsored bodies are accountable for the use, including the regularity and propriety, of the grants received and the other income and expenditure of the sponsored bodies.

The responsibilities of an Accounting Officer, including responsibility for the propriety and regularity of the public finances for which the Accounting Officer is answerable, for keeping proper records and for safeguarding the assets of the department or other arm’s length sponsored public bodies for which the Accounting Officer is responsible, are set out in Managing Public Money^{[footnote 14]} published by HM Treasury.

As the Accounting Officer, I have taken all the steps that I ought to have taken to make myself aware of any relevant audit information and to establish that the department’s auditors are aware of that information. So far as I am aware, there is no relevant audit information of which the auditors are unaware.

I confirm that the Annual Report and Accounts as a whole is fair, balanced and understandable and I take personal responsibility for the annual report and accounts and the judgments required for determining that it is fair, balanced and understandable.

Governance Statement

Introduction

The Accounting Officer is responsible to Parliament for the stewardship of the resources given to DLUHC, including those allotted to our arm’s length bodies (ALBs) and for funding which is devolved to local bodies such as local authorities (LAs) and Local Enterprise Partnerships (LEPs). This Governance Statement sets out our range of measures for effective control across the department and the sources of assurance available to the Accounting Officer to support the conclusions drawn.

More detail on the control system is given in the Accounting Officer System Statement^{[footnote 15]} (AOSS) and the National Local Growth Assurance Framework^{[footnote 16]} which gives details of arrangements for LEPs.

Details for individual ALBs are contained in the Governance Statements of their individual Annual Report and Accounts.

Board Committees

The Departmental Board and Non-Ministerial Board

The Departmental Board and Non-Ministerial Board consider the department’s overall performance against its strategic objectives, metrics, and indicators, supported by a verbal report from the Permanent Secretary and, where appropriate, the Departmental Performance Reports produced for the Executive Team. The Departmental Board receives a briefing and report on the latest ARAC meetings.

The Departmental Board is chaired by the Secretary of State and comprises Ministers, Permanent Secretary, Chief Financial Officer and Non-Executive Directors, totalling 14 people at 31 March 2023 The Departmental Board met two times during 2022-23; this is less frequent than usual due to changes in the Ministerial Team. Full attendance records are provided in the Directors’ Report. The Departmental Board discussed devolution, delivery of priority projects, third session legislation and our contribution to the response to the war in Ukraine.

The Non-Ministerial Board is chaired by the Lead Non-Executive Director and is comprised of the Non-Executive Directors and the Executive Team, which totalled 16 people at 31 March 2023. The Non-Ministerial Board met four times during 2022-23 and the Non-Executive Directors also met with members of the Executive Team throughout the year to provide challenge and support on a range of departmental priorities.

To ensure compliance with the corporate governance code of good practice^{[footnote 17]}, we undertake periodic evaluations of board effectiveness, manage conflicts of interest, and effectively manage and report risks.

The 2022-23 Board Effectiveness Evaluation was undertaken by our Lead Non-Executive Director, who submitted their report at the end of March 2023. The evaluation included several recommendations such as meeting quarterly, with meetings scheduled at the start of the year to coincide with key strategic periods, and meeting outside of London where possible.

All Board Members are required to declare conflicts of interest so they can be understood, considered and handled appropriately. The Ministerial Code requires all Ministers to disclose their interests in detail; these are published by the Government. We maintain a register of interests, covering all Executive and Non-Executive members, ensuring any potential or material conflicts of interest identified are sufficiently and appropriately managed.

Audit and Risk Assurance Committee

The Audit and Risk Assurance Committee (ARAC) is chaired by a Non-Executive Director, with members including other Non-Executive Directors and an independent member. During 2022-23, it was also attended by the Permanent Secretary, Chief Financial Officer, Financial Director, Chief Risk Officer and representatives from National Audit Office (NAO), Government Internal Audit Agency (GIAA) and Homes England. ARAC met five times throughout the year and review a range of topics including; risk management, internal and external audit programmes, local government finance and proposed improvements to financial forecasting. ARAC also reviewed the Annual Report and Accounts for 2021-22.

The Executive Team and its Sub-Committees

Executive Team

The Executive Team is chaired by the Permanent Secretary and comprised of Directors General, the Director of Strategy, Director of Communications and the Director of People, Capability and Change. The Executive Team meets one to two times per week to consider corporate and policy issues and the strategic planning, performance, management and coordination of the department. This includes reviewing the Departmental Performance Report each month. A sub-group of the Executive Team also meet monthly as the Senior Talent and Pay Committee to consider senior civil service resourcing, talent and pay.

People Committee

The People Committee, chaired by the Director General for Local Government, Resilience and Communities, is a decision‑making forum on people and workforce matters.

Investment Sub-Committee (ISC)

The Investment Sub-Committee (ISC) is chaired by the Chief Financial Officer and comprises a fixed membership of directors from across professions who scrutinise and approve investment proposals to ensure value for money and that Managing Public Money requirements are met.

Risk Sub-Committee

The Risk Sub-Committee (RSC) is chaired by the Chief Financial Officer and comprises the Chief Risk Officer, the Group Chief Internal Auditor, and directors from across the department. The RSC reviews corporate risk and oversees the risk framework.

Governance Assurance Exercise

At the end of each financial year, a governance assurance exercise takes place to reflect on the effectiveness of governance arrangements, internal controls and risk management implemented by Directors General and Directors in the discharge of their delegated authority and responsibilities.

During March 2023, a Governance Assurance Panel (GAP) was held for each Director General-led group:

• Levelling Up

• Safer and Greener Buildings

• Regeneration

• Local Government, Resilience and Communities

• Union and Elections

• Corporate Group

Each panel was chaired by a Non-Executive Director, supported by our internal auditors, Chief Risk Officer and observers from the NAO. Director Generals and their directors presented evidence to their respective panels and summarised challenges they faced during the financial year. All six panels were held in March 2023.

Overall, the 2022-23 GAP exercise concluded that good progress had been made in further strengthening our approach to delivery, embedding effective risk management arrangements and implementing a new governance framework which was launched in September 2022, with all groups now having portfolio boards. The exercise found this approach now needs to be fully embedded and that the department needs to and ensure we have there is appropriate capacity and capability to deliver our priorities. The GAP exercise provided assurance that plans and adequate governance arrangements were in place to drive this forward.

Ministerial Directions

There was one ministerial direction in 2022-23.

On 23 February 2023, the Secretary of State gave a ministerial direction to the Permanent Secretary as Accounting Officer of the department to continue to approve expenditure, ahead of Royal Assent, as required in line with the objective of completing the Holocaust Memorial as soon as possible and achieving value for money for the tax payer. The letters providing the rationale and authorisation can be read here: https://www.gov.uk/government/publications/ukholocaust-memorial-and-learning-centre-ministerial-direction

Locally Devolved Budgets

We are responsible for the Local Government Accountability Framework for local authorities and the award of the Local Growth Fund to LEPs. This is set out in detail within our Accounting Officer System Statement. This section summarises the key controls that provide the assurance that devolved budgets meet the requirements of Managing Public Money.

Local Government Accountability Framework

Assurance advice is provided to the Accounting Officer on whether the core accountability framework for local authorities has remained robust. This takes account of published reports on local audit, accounts and governance, covering a range of issues including regularity propriety and achieving value for money locally. It also includes research from the sector, work we have produced and specific advice on whether the framework may need amending.

For 2022-23, this has included:

• Strengthening the capital finance system in response to changes in patterns in local authority behaviour – a minority of authorities are taking risk through excessive debt, over-reliance on commercial income or the pursuit of novel and risky investments. Details of the actions being taken were set out in the policy document Local authority capital finance framework: planned improvements^{[footnote 18]} (July 2021).

• Continuing to understand any short-term pressures on local authorities, linking our ongoing work on stewardship with wider work across government on other concurrent pressures.

• Continuing to deliver our response to the Redmond Review, implementing the December 2021 package of measures to improve delays to local audit. This has included the appointment of the first Financial Reporting Council (FRC) director, for the local audit unit, and memorandum of understanding with the FRC setting out roles and responsibilities and how we expect the system leader role to work when shadow arrangements start in 2023-24. We also worked with Public Audit Appointments on their procurement strategy, provided a further £15 million to local bodies to help strengthen local financial reporting, laid a statutory instrument to resolve issues relating to valuation of infrastructure assets in local authority accounts issues and continued to work with the sector to develop a longer-term solution.

During 2022-23, Commissioners were in place in Liverpool City Council, Slough Borough Council, Sandwell Metropolitan Borough Council and Thurrock Council to support and challenge the authorities and to provide assurance on progress to the Secretary of State.

• Liverpool: Commissioners were appointed in June 2021 following a best value inspection that found failings in highways, regeneration and property management. The Secretary of State expanded this intervention in November 2022 to give Commissioners wider powers over governance, finance and HR, and appointed an additional Finance Commissioner, following further evidence of failure as detailed in the Commissioners second report and consideration of other representations.

• Slough: Commissioners were appointed in December 2021 in Slough following an external assurance review that found significant governance and financial failings. The Local Government Minister announced expansion of the intervention on 1 September 2022 to give Commissioners additional powers over recruitment following the Commissioners first report and consideration of other representations.

• Sandwell: Commissioners were appointed in Sandwell in March 2022 following a value for money governance review conducted by the council’s external auditors that highlighted mismanagement, with ineffective scrutiny and accountability arrangements.

• Thurrock: In September 2022, a best value intervention was announced, with Essex County Council appointed as both Commissioner and best value inspector, following concerns the council’s exceptional level of financial risk and debt.

Improvement and assurance arrangements were put in place at Nottingham City Council and the London Borough of Croydon following non-statutory reviews in November 2020 that found significant failings.

• Nottingham: In November 2022, the Secretary of State announced that Nottingham Board was to be put on a statutory footing following evidence of historic unlawful Housing Revenue Account (HRA) expenditure.

• Croydon: On 16 March 2023, Ministers announced they are ‘minded to’ intervene and put the existing Panel on a statutory footing. Representations on the proposed intervention package were received from interested parties by 30 March and a final decision will be made in due course.

Four councils have issued Section 114 notices since March 2020; Slough Borough Council, the London Borough of Croydon, Nottingham City Council and Northumberland County Council. In February 2023, government agreed to provide Slough, Croydon, Thurrock, Cumberland and Westmorland and Furness councils with in-principle exceptional financial support for 2023-24 and, in the cases of Croydon and Thurrock, to cover prior years.

We have maintained our regular engagement with the Local Government Association and other government departments, as well as local authorities. This informs, and is informed by, the extensive work carried out by our Local Government Finance Directorate to understand specific financial pressures and the special grant funding and exceptional financial support arrangements to support the sector where needed.

In the Levelling Up White Paper, we announced our ambition to set up a new Office for Local Government (Oflog). Oflog aims to improve the transparency of local government performance through the provision of targeted data and analysis to its three main audiences of the citizen, local government and central government. By fostering accountability through increased transparency, Oflog will form a part of the Local Government Accountability Framework (LGAF) and help drive the improvement of local government performance.

Levelling Up and Domestic Grants

The Levelling Up White Paper also set the context for a range of domestic funding programmes targeting the regeneration of towns and cities, including the UK wide £4.8 billion Levelling Up Fund (LUF) and £3.6 billion Towns Fund (TF) which includes Town Deals and the Future High Streets Fund for England only.

In response to the Government Functional Standard for Grants (GovS 015) and Managing Public Money, the DLUHC Domestic Grant Assurance and Compliance Team established the Levelling Up Funds Local Authority Assurance Framework (LUFLAAF) describes lines of defence to secure and assure propriety, regularity and value for money in the delivery of the three funds, based on:

• Local authority Chief Finance Officer secures the first line of defence assurance at an operational management level within the local authority in receipt of funds

• Annual assurance provided to the Accounting Officer by the Chief Finance Officer of the LA / Accountable Body via a Statement of Grant Usage

• ‘Deep dive’ reviews, based on risk and a 5% sample, focussing on governance, counter fraud, subsidy control / State Aid and testing of procurements

Payment recommendations have been made reflecting financial and delivery performance in tandem with assurance secured via Statements of Grant Usage and assurance statements.

During the 2022-23 assurance cycle, all 190 assurance statements were provided and 15 deep dives were undertaken, made up of 9 on LUF and 6 on the Towns Fund. The deep dives identified the need for more proactive procurement and subsidy control guidance to local authorities. Remedial action is planned for two local authorities where transparency of governance and decision making could not be secured for one and grant management concerns remain for the second. Actions to secure confidence from the local authorities have been agreed via assurance decision making groups, of which fund delivery teams are joint members.

GIAA completed a formal audit of both funding programmes in 2022-23, finding the assurance to be ‘Substantial’ for LUF and Towns Fund, securing the highest grading available.

For non-local authority LUF grant recipients in Northern Ireland, assurance in the first instance is secured by the Delivery Team through the claims checking process ahead of payments, the second line assurance cycle is due to start in 2023-24 delivered by the Assurance and Compliance Team

The £220 million Community Renewal Fund (CRF) and the £150 million Community Ownership Fund (COF) also have Assurance Frameworks reflecting their UK wide nature and different types of grant recipients and payment cycles.

For CRF, as a 2022-23 revenue programme the assurance cycle, which has now concluded, was proportionate based on the nature of grant recipients, including UK local authorities and non-local authorities in Northern Ireland. It included:

• Statement of Grant Usage secured from the Chief Finance Officer of the local authority

• For non-local authorities in Northern Ireland, we provided the first line of defence assurance through 2% claims checks to inform payments

• 12 local authority assurance reviews, equating to 11.9% of the programme – no issues for six and only minor deficiencies identified for the remaining six, all now resolved.

• Non-local authorities spot checks completed on 7 claims (9%) – no issues identified, and

• GIAA informal reviews to confirm active delivery of the CRF Framework.

COF assurance cycle was newly composed for 2022-23, reflecting the capital funding is directly awarded to community organisations. Assurance is active, engaging with projects based on their payments and progress, to include proof of existence checks.

Our Risk Management Framework

Our Risk Management Framework is designed to support effective decision making, enabling the department to achieve its strategic and operational objectives.

Our approach aligns with the methodology set out by ‘The Orange Book’. The Framework reinforces the importance of managing risk proactively, empowering our teams and people to take responsibility and fostering a culture where consideration of risk is integral to delivery of the department’s activities.

The principles underlying the Risk Management Framework are:

• Governance and Leadership: risk management shall be an essential part of our governance approach.

• Integration: risk management shall be an integral part of our activities and decision-making.

• Collaboration: risk management shall be collaborative across the three ‘lines of defence’ (see detail below) and the department.

• Structured risk management processes: we will have clear processes for the identification, reporting, assessment and treatment of risks.

• Continual improvement: we will seek to continually improve our approach to risk management through learning and experience.

• Culture: we will foster a ‘no-blame’ and ‘challenge’ culture in our risk management approach and promote an ethos under which all staff take responsibility for risk.

We operate the “three lines of defence” model to manage risks holistically in an integrated and mutually supportive manner, with each of the lines of defence contributing to the overall assurance.

• First line of defence: each team has primary ownership, responsibility and accountability for identifying, assessing and managing the risks relevant to their business activities.

• Second line of defence: consists of a ‘second opinion’ / layer to monitor, challenge and facilitate effective risk management and co-ordinate the reporting of risk information. Our Group Risk team is a core part of the second line of defence.

• Third line of defence: consists of audit activity, which for us is undertaken by the GIAA. We also draw on sources of external assurance, including the Government Functional Standards and the National Audit Office (NAO).

Principal risks

We continue to operate within a complex and dynamic environment, often influenced by geo-political events and other external factors. We have made good progress in improving our risk maturity through our Risk Action Plan and risk business partners; we continue to embed the improvements.

As of May 2023, there were thirteen principal risks at a corporate level which are aligned to the cross-government ‘Orange Book’ suggested risk categories – these are listed in the table below, ordered by their current overall risk rating (highest to lowest).

Each principal risk is sponsored by a member of the Executive Team, with a lead Director responsible for managing appropriate controls and mitigating actions in line with our risk appetite. All principal risks and associated controls and mitigations have been reviewed and signed off by the Risk Sub-Committee, the Executive Team and ARAC. This includes a programme of ‘deep dives’ into each principal risk throughout the year. Project and programme level risks are categorised by principal risks to help each portfolio understand the makeup of its risk profile and reflected within the Departmental Performance Report. Ongoing review and moderation will ensure they are reflective of the risks the department faces in delivering its strategic objectives.

Principal Risk	Sub-Categories
Financial Risk	Control total breach Value for money Investment risk Credit risk
Local Government Delivery Risk	Local tier funding, capacity and capability Increased pressures on homelessness system
Strategy Risk	Significant legislative agenda Levelling up Place-based working
People Risk	Capacity & Capability Agility Culture and inclusion Engagement and wellbeing
Project Delivery Risk	Capacity and capability Inadequate project planning and controls Weak and/or accelerated project initiation
Resilience Risk	Surge resourcing Threats, hazards, risks and capabilities management
Systems and Infrastructure Risk	Investment & maintenance Capability and capacity Governance User experience
Governance Risk	Compliance with procedures Robustness of programme level controls
Legal Risk	Risk of successful legal challenge Capacity Exposure to risk via ALBs
Information and Data	Data systems, use and capability to support delivery Wider evidence, engagement and analysis Research and evaluation
Commercial Risk	Non-compliant procurements Short-notice procurements Process for contract management Conflicts of interest
ALB Risk	Internal system failure Inadequate oversight
Security Risk	Physical and Personnel security Security culture Capacity and capability Incident management

Counter Fraud, Error and Whistleblowing

Counter fraud has been enhanced with the publication of a new framework and standards to support the delivery of departmental objectives and align to requirements set out by the Public Services Fraud Authority (PSFA). This is reflected in the most recent GIAA audit report on counter fraud which awarded us a grading of ‘Substantial’. This reflected GIAA’s conclusion that recommendations from previous reviews have been addressed, progress on the implementation of a revised Counter Fraud Strategy and Framework and the action plan in place to ensure comprehensive oversight of fraud risk management in the department. This includes updated procedures for error and fraud loss recovery and reporting, fraud risk assessment standards, business case support and a Counter Fraud learning offer. Documentation for whistleblowing, gifts and hospitality and conflicts of interest have been updated to reflect new Cabinet Office guidance, and returns are monitored and reviewed. The Counter Fraud Team will continue to further strengthen our work in this area.

We have an organised response plan for fraud and error recovery aligned to the Civil Service Code and the Three Lines of Defence model. It set out how we how we handle fraud allegations, roles and responsibilities of programmes and escalation routes, including when cases may be referred to the GIAA for additional investigation support.

On fraud prevention, a new Fraud Risk Assessment Policy has been published, supported by training and guidance. This is now embedded and contributes to the regular development of a departmental fraud risk assessment, highlighting the key fraud risks against our activity.

All programmes valued over £5 million must maintain a full fraud risk assessment and high profile or projects currently within the Government Major Projects Portfolio (GMPP) are required to undertake an Initial Fraud Impact Assessment to highlight key fraud threats. On the Ukraine Response, the team have completed a reconciliation exercise on discretionary payments made to local authorities to support the resettlement and placement of refugees. This has driven a requirement to update the fraud risk assessment for the programme.

The Counter Fraud Team has maintained a preventative approach to fraud risk management, influenced from lessons learned from the COVID-19 pandemic. It achieves this through early engagement with policy and design teams, throughout business case development and ensuring that standardised practice is shared and effectively implemented across the department. The establishment of the Grants Centre of Excellence has strengthened the level of support we are able to provide to grant schemes within the department, specifically funds related to Levelling Up, from scheme design to counter fraud. The most recent GIAA internal audit report awarded the department a grading of ‘Substantial’ in this area. Counter fraud resource has also been embedded within the building remediation team to provide additional support on the Building Safety Fund – this has included a full revision of the programme fraud risk assessment.

Fraud measurement and assurance exercises were paused during the pandemic but will resume in 2023 for core department activity.

We will continue to support local authorities by sharing best practice and highlighting measures they can take to strengthen resilience to fraud and error. During the pandemic, this included fraud risk management guidance for the COVID Response Fund which provided funding to ensure that councils could maintain pre-pandemic service levels and delivery. Payments captured by these funds were made directly to local authorities who then administered the funds, taking ownership of the associated fraud risks, highlighted by collaborative fraud risk management exercises undertaken between local government and our policy teams.

In 2022-23, a review of our whistleblowing documentation confirmed that our policies remain in line with the most recent recommendations from Cabinet Office. Colleagues can report concerns through a variety of routes, including line managers or nominated officers who have been specifically trained to respond to concerns raised under the Civil Service Code. All reports are treated confidentially. Alternatively, colleagues can access a fully independent whistleblowing line via our Employee Assistance Partner, Health Assured. Should colleagues wish to raise a concern specific to Counter Fraud they are able to do so by contacting the Counter Fraud Team, again all communication is treated as confidential.

There are also a variety of routes for external whistleblowers. Local authorities maintain their own fraud hotlines and are responsible for responding to concerns related to delegated programmes. For larger schemes, people have access to specific reporting platforms on gov.uk, which allows us to triage requests to the appropriate local authority. For schemes we manage directly, individual programmes are responsible for ensuring that whistleblower concerns are escalated to the relevant authority, either within the programme’s formalised escalation routes or through the Counter Fraud Team.

Information Security

Procedures and processes are in place to protect information and data and ensure it is only used for the purposes for which it was collected. We manage a range of data relating to staff and citizens, most of which is used to support our policy work and does not allow the identification of individuals.

In 2022-23 there were no data breaches for the department. There was one breach by an ALB which met the threshold for reporting to the Information Commissioner’s Office (ICO). This occurred in the Planning Inspectorate when sensitive personal information was inadvertently released as part of a response to an Environmental Information Request. The sensitive personal information was subsequently deleted and no further action was required by the ICO.

The Digital Directorate continue to raise awareness of cyber security and provide advice and guidance to colleagues about how to stay secure online, in both personal and professional context. Cyber security risk management has improved significantly and we are one of the highest rated departments in the cross government departmental security health check, with 100% of requirements met in 2022-23.

Business Appointment Rules

The Business Appointment Rules (BAR) is part of the Civil Service Management Code and regulates the movement of civil servants and ministers into other business sectors. Civil servants must consider if the BAR requires them to seek departmental permission before applying for or accepting a job outside of the service. Most moves do not require an application, but some will, and in some cases approval is subject to conditions.

The aim of the BAR is to avoid any reasonable concerns that:

• a civil servant might be influenced in carrying out his or her official duties by the hope or expectation of future employment with a particular firm or organisation, or in a specific sector, or

• on leaving the civil service, a former civil servant might improperly exploit privileged access to contacts in government or sensitive information, or

• a particular firm or organisation might gain an improper advantage by employing someone who, in the course of their official duties, has had access to information relating to unannounced or proposed developments in government policy, knowledge of which may affect the prospective employer or any competitors, or commercially valuable or sensitive information about any competitors.

In 2022-23, we received BAR applications from 18 individuals; all were approved. Details of any applications and the outcome are published on our website^{[footnote 19]} for staff at Senior Civil Service (SCS) Pay Band 1 and 2 level and Special Advisers of equivalent level, and on the Advisory Committee on Business Appointments website^{[footnote 20]} for SCS Pay Band 3 or above and Ministers. BAR applications and outcomes are reported to the Audit and Risk Assurance Committee on a quarterly basis.

Internal Audit Opinion

The internal audit function provided by the GIAA, which complies with the Public Sector Internal Audit Standards, is a key source of independent assurance for us. The annual internal audit programme is closely linked to our key risks, and those of our ALBs. Arrangements are in place to ensure the Accounting Officer is made aware of any significant issues which indicate that key risks are not being effectively managed.

The Group Chief Internal Auditor’s (GCIA) opinion on governance, risk management and control for the year was assessed as ‘Moderate’ which means that some improvements are required to enhance adequacy and effectiveness. The opinion took into consideration our operating context over the year, including turbulent economic, leadership and strategic landscape. It acknowledged:

• Our developing policy, balanced with accountability for the delivery of defined outcomes, now underpins our portfolio management strategy and structure. This continues to drive performance, whilst managing the financial, capacity and capability risks;

• Good progress against areas that required further development, as highlighted in the 2021-22 opinion;

• The significant strengthening of the control framework underpinning grants management and the counter fraud arrangements, including identified future efficiencies with the elections claims processes, in conjunction with the development of an electronic system controlling this.

The GCIA did not identify any significant weaknesses that impacted the delivery of key priorities. Going forward, the GCIA highlighted the need for:

• Continued focus on driving delivery, including via ALBs and delivery partners underpinned by robust forecasting and performance data, recognising the strengthening relationship with Homes England.

• Focus on the impacts of new and changing government strategies, including Net Zero and funding simplication.

External Scrutiny

In 2022-23, our work was the subject of four NAO reports and four Public Accounts Committee (PAC) evidence sessions, all of which are summarised below from the published reports.

NAO Reports

Timeliness of local auditor reporting on local government in England: This report provides a factual update on local auditor reporting since our March 2021 report. It sets out:

• An up-to-date position on the timeliness of audit opinions issued on local government bodies in England (local authorities, local police bodies, local fire bodies) and other bodies (combined authorities, functional bodies, local transport, national parks authorities, pensions authorities and waste disposal authorities)

• An assessment of the impact of delays to local government audit opinions

• The steps government and others have taken to address concerns reflected in PAC’s 2021 and 2022 recommendations. These concerns covered the need to: support the local audit market; increase the supply of qualified auditors; and reform the local audit system

The report concluded that delays to local government audit opinions continue to have impacts elsewhere in the public audit system. In turn, delays in one sector disrupt audit firms’ planning and delivery for the other sectors.

Affordable Homes Programme since 2015: The Affordable Homes Programme provides grant funding to housing providers in England to support the costs of delivering affordable homes. The programme has iterations based on funding periods or policy changes. This report assesses how effectively we discharge our responsibilities for the programme and oversee Homes England and the GLA. It also examines Homes England’s management of its part of the Programme.

The report concluded that since 2015, we have identified and implemented improvements to the governance and oversight of the Programme, and we will continue to improve our programme management. We demonstrated that the 2021 programme provides economic benefits. However, we no longer expect the programme to fully deliver its original targets. Since the report we have worked with our delivery agencies to confirm the programme’s capacity to deliver. This review will complete very soon and will enable us to update our delivery forecasts.

Holocaust Memorial and Learning Centre: We are responsible for delivering the Government’s commitment to construct a striking new Holocaust Memorial at Victoria Tower Gardens, Westminster.

Construction of the Memorial and Learning Centre had not begun at the time of fieldwork, but the NAO concluded that there were risks and uncertainties emerging which were likely to increase costs and cause delays. This investigation set out NAO’s findings in relation to how we are set up to manage the programme, maximising the impact of the programme and emerging risks to cost and schedule.

We welcomed the report, noting that the NAO investigation confirmed our assessment of the risks and challenges associated with this important and complex project.

Departmental Overview 2021-22: Department for Levelling Up, Housing and Communities: This summarises the key information and insights that can be gained from NAO’s examinations of us as a department and our ALBs in the sector in England, and our Annual Report and Accounts.

The studies can be viewed on the NAO website: https://www.nao.org.uk/.

PAC evidence sessions

The Public Accounts Committee held evidence sessions on the following subjects:

1. Housing recall (6 July 2022)

2. The Affordable Homes Programme since 2015 (22 September 2022)

3. DLUHC: Homes data, local economic growth, local government funding settlement (23 January 2023)

4. Timeliness of local auditor reporting (16 March 2023)

Details of the PAC reports are on the PAC website: https://committees.parliament.uk/committee/127/public-accountscommittee.

The PAC makes recommendations which we respond to in Treasury Minutes. These can be found at https://www.gov.uk/government/collections/treasury-minutes.

LUHC Select Committee

The LUHC Select Committee have 12 current inquiries, as follows:

• The finances and sustainability of the social housing sector, opened 23 March 2023

• Financial reporting and audit in local authorities, opened 3 March 2023

• Reforms to national planning policy, opened 2 February 2023

• Electoral registration, opened 15 December 2022

• Funding for Levelling Up, opened 20 October 2022

• Draft strategy and policy statement for the Electoral Commission, opened 30 August 2022, report published 1 December 2022

• Reforming the private rented sector, opened 21 July 2022, report published 9 February 2023

• Exempt accommodation, opened 7 December 2021, report published 27 October 2022

• Council tax collection, opened 15 November 2021

• The regulation of social housing, opened 10 November 2021, report published 20 July 2022

• Permitted development rights, opened 23 March 2021, report published 22 July 2021

• Long-term funding of adult social care, opened 4 March 2021, report published 4 August 2022

Delegated Authority Levels

On 1 February 2023, the Chief Secretary to the Treasury reduced our delegated authority limits for all new CDEL programmes and projects to £nil (from £30 million). No changes were made to our DALs for other spend categories or in relation to our existing CDEL programmes.

Our ALBs and the role of the Senior Sponsors and Boards

We sponsor fourteen ALBs. We have one Executive Agency and 13 designated bodies. All bodies apart from the Queen Elizabeth II Conference Centre, Ebbsfleet Development Corporation and the Architects Registration Board are consolidated into our departmental accounts.

Executive Agency	Planning Inspectorate
Advisory Non-Departmental Public Body (NDPB)	Building Regulations Advisory Committee Boundary Commission for England Boundary Commission for Wales
Tribunal (NDPB)	Valuation Tribunal for England
Executive Non-Departmental Public Bodies (NDPBs)	Homes England Leasehold Advisory Service Regulator Of Social Housing The Housing Ombudsman Valuation Tribunal Service
Other Body (not classified as NDPB)	Ebbsfleet Development Corporation Local Government and Social Care Ombudsman
Public Non-Financial Corporation	Architects Registration Board Queen Elizabeth II Conference Centre

Note: Sponsorship for His Majesty’s Land Registry was transferred to us from the Department for Business and Trade with effect from 1 June 2023.

Each ALB maintains its own governance structures and processes, appropriate to their business and scale. Each have their own Accounting Officer with delegated authority from the Principal Accounting Officer to oversee the operation and delivery of their objectives. Homes England is currently our largest ALB, details of their governance arrangements and activity during 2022-23 are set out within their Annual Report and Accounts.

We have embedded the Cabinet Office’s ‘Senior Sponsor’ partnership model^{[footnote 21]}, with senior officials within the department providing oversight of the performance and the direction of the ALBs. We are also applying the ‘Arm’s Length Bodies Sponsorship Code of Good Practice’^{[footnote 22]}, published for ‘use in trial’ in May 2022.

A framework agreement, or equivalent, is in place with each ALB, including their priorities and strategic aims, lines of accountability and governance arrangements. ALB boards ensure effective arrangements are in place to provide assurance on risk management, governance and internal control.

Our central ALB Governance team provides additional advice and assurance to the Chief Financial Officer and Principal Accounting Officer. Further assurance is provided through:

• An annual risk-based review to ensure the level of sponsorship and Accounting Officer engagement is proportionate – in 2022-23, this was incorporated into our departmental governance assurance exercise.

• A bi-annual meeting for ALB Audit and Risk Assurance Committee chairs;

• Key performance indicators for each ALB to enable effective performance assessments; and

• A consistent approach to ALB Board effectiveness with annual appraisal reviews, including for chairs.

The three-year Public Bodies Review Programme^{[footnote 23]} was launched by Cabinet Office in 2022. In 2022-23, we prioritised:

• Homes England – proceeding to a full review at the start of 2023-24 following a self-assessment

• Housing Ombudsman Service – self-assessment currently being concluded.

• Local Government and Social Care Ombudsman – self-assessment currently being concluded.

Building Safety Levy

We will be responsible for collecting revenues related to the Building Safety Act 2022 when the regulations have been passed by Parliament. This includes the Building Safety Levy, grant recoveries collected from developers under Developer Remediation Contracts and a related Responsible Actors Scheme for residential developers, These revenues will contribute to the costs of the Building Safety Programme. While expenditure for the programme is incurred within Departmental Resource Accounts, the revenue collected from the Building Safety Levy and grant recoveries e Accounts will be published in a separate Trust Statement. The statement will however include a disclosure note on expenditure incurred. The statement for 2022-23 will be published in autumn. The Levy commences in 2023-24.

My Conclusion

I have reviewed the evidence provided through the Governance Assurance Panel exercise, the Internal Audit opinion, NAO, and PAC reports. I am satisfied that overall, the department continues to embed a sound system of governance, assurance, and internal control across the department. The department has also continued to develop and strengthen its approach to risk and financial management during the year, as well as improvements to governance and portfolio management.

Remuneration and staff report

Remuneration report

The Remuneration Report provides detail on the remuneration and pension interests of the department’s board members. The Remuneration Report refers to the core department only. Similar Remuneration Reports are available in the Annual Reports and Accounts of the individual ALBs.

All tables and the pay multiples section of the Remuneration Report have been subject to audit.

Service Contracts

The Constitutional Reform and Governance Act 2010 requires Civil Service appointments to be made on merit on the basis of fair and open competition. The Recruitment Principles published by the Civil Service Commission specify the circumstances when appointments may be made otherwise.

Unless otherwise stated below, the officials covered by this report hold appointments which are open-ended. Early termination, other than for misconduct, would result in the individual receiving compensation as set out in the Civil Service Compensation Scheme.

Further information about the work of the Civil Service Commission can be found at www.civilservicecommission.org.uk

Remuneration Policy

The remuneration of senior civil servants is set by the Prime Minister following independent advice from the Review Body on Senior Salaries. The Review Body also advises the Prime Minister from time to time on the pay and pensions of Members of Parliament and their allowances, on Peers’ allowances, and on the pay, pensions and allowances of Ministers and others whose pay is determined by the Ministerial and Other Salaries Act 1975.

The Review Body takes account of the evidence it receives about wider economic considerations and the affordability of its recommendations. Further information about the work of the Review Body can be found at: www.ome.uk.com

Remuneration (Including Salary) and Pension Entitlements

The following sections provide details of the remuneration and pension interests of the Ministers and most senior management (i.e. Board Members) of the department who have been in post at some point in the current or prior year.

No benefits in kind were received by any minister or official named in the tables below in 2022-23 or 2022-23.

Single total figure of remuneration (subject to audit)

Ministers		Salary £		Full year Equivalent Salary if different £		Pension benefits(1) £ (to nearest £1,000)		Severance Pay £		Total remuneration £ (to nearest £1,000)
	2022-23	2021-22	2022-23	2021-22	2022-23	2021-22	2022-23	2021-22	2022-23	2021-22
The Rt Hon Michael Gove MP Appointed 15 September 2021, Re-Appointed 25 October 2022	46,274	36,753	67,505	67,505	11,000	11,000	16,876	-	74,000	48,000
Lord Stephen Greenhalgh Appointed 18 March 2020, left 8 July 2022(2)	-	-	-	-	-	-	-	-	-	-
Dehenna Davison MP Appointed 08 September 2022	12,617	-	22,375	-	3,000	-	-	-	16,000	-
Felicity Buchan MP Appointed 30 October 2022	9,323	-	22,375	-	2,000	-	-	-	11,000	-
Baroness Jane Scott Appointed 20 September 2022	53,831	-	107,335	-	9,000	-	-	-	63,000	-
Lee Rowley MP Appointed 08 September 2022	12,617	-	22,375	-	3,000	-	-	-	16,000	-
Rachel Maclean MP Appointed 07 February 2023	4,714	-	31,680	-	1,000	-	-	-	6,000	-
The Rt Hon Greg Clark MP Appointed 07 July 2022	11,100	-	67,505	-	2,000	-	16,876	-	30,000	-
The Rt Hon Simon Clarke MP Appointed 06 September 2022, left 25 October 2022	6,843	-	67,505	-	2,000	-	16,876	-	26,000	-
Lord Richard Harrington Appointed 8 March 2022(2)	-	-	-	-	-	-	-	-	-	-
Kemi Badenoch MP Appointed 16 September 2021, left 6 July 2022	8,431	17,610	31,680	31,680	2,000	5,000	7,920	-	18,000	23,000
Stuart Andrew MP Appointed 9 February 2022, left 6 July 2022	10,560	4,620	31,680	31,680	2,000	1,000	-	-	13,000	6,000
Eddie Hughes MP Appointed 18 January 2021, left 8 September 2022	9,758	22,375	22,375	-	3,000	6,000	5,593	-	18,000	28,000
Neil O’Brien MP Appointed 16 September 2021, left 6 July 2022	5,955	12,120	22,375	22,375	1,000	3,000	5,593	-	13,000	15,000
Andrew Stephenson MP Appointed 20 September 202, left 27 October 2022	2,548	-	22,375	-	1,000	-	-	-	4,000	-
Lia Nici-Townend MP Appointed 08 July 2022, left 20 September 2022	5,173	-	22,375	-	1,000		-	-	6,000	-
Marcus Jones MP Appointed 07 July 2022, left 7 September 2022	4,181	-	31,680	-	1,000		7,920	-	13,000	-
Paul Scully MP Appointed 07 July 2022, left 27 October 2022	11,185	-	31,680	-	3,000		-	-	14,000	-
Lucy Frazer MP Appointed 26 October 2022, left 7 February 2023	10,560	-	31,680	-	2,000		-	-	13,000	-

(1) The value of Parliamentary Contributory Pension Fund (PCPF) pension benefits accrued during the year is calculated as (the real increase in pension multiplied by 20) less (the contributions made by the individual). The real increase excludes increases due to inflation or any increase or decrease due to a transfer of pension rights. This is a different basis to the way CETV (Cash Equivalent Transfer Value) is calculated in the Ministerial Pension Benefits table.

(2) Lord Harrington and Lord Greehalgh drew no salary from the department during FY 22-23.

Single total figure of remuneration (subject to audit)

Officials		Salary £’000		Full year Equivalent Salary if different £’000		Bonus Payments £’000		Other Benefits £ (to nearest £1,000)		Pension benefits(1) £ (to nearest £1,000)		Total remuneration £ £’000
	2022-23	2021-22	2022-23	2021-22	2022-23	2021-22	2022-23	2021-22	2022-23	2021-22	2022-23	2021-22
Sarah Healey Permanent Secretary (appointed 07 February 2023)(2)	10-15	–	170-175	–	–	–	–	11,000	–	25-30	0
Kate O’Neill Director, Strategy and Private Offices (appointed 09 November 2022)	35-40	–	95-100	–	0-5	–	–	–	5,000	–	45-50	0
Matt Thurstan Director General, Chief Financial Officer and Corporate	160-165	160-165	–	–	0-5	0-5	–	–	27,000	124,000	190-195	285-290
Emran Mian Director General, Regeneration	130-135	125-130	–	–	10-15	15-20	–	–	33,000	42,000	175-180	185-190
Catherine Frances Director General, Local Government, Resilience and Communities	130-135	125-130	–	–	0-5	15-20	–	–	25,000	38,000	155-160	180-185
Richard Goodman Director General Safer & Greener Buildings	125-130	120-125	–	–	10-15	0-5	–	–	49,000	47,000	185-190	165-170
Will Garton Director General, Levelling Up	125-130	0-5	–	120-125	0-5	–	–	–	104,000	0	230-235	0-5
Simon Claydon Director People, Capability and Change	100-105	80-85	–	100-105	0-5	–	–	–	(15,000)	15,000	90-95	95-100
Kay Withers Director for Strategy (Left 08 November 2022)	50-55	15-20	90-95	95-100	0-5	–	–	–	23,000	12,000	80-85	25-30
Jeremy Pocklington Permanent Secretary (Left 06 February 2023)	140-145	160-165	165-170	–	–	–	–	–	4,000	34,000	145-150	195-200
Sue Gray Second Permanent Secretary, Union and Constitution (Left 2 March 2023)	140-145	80-85	150-155	150-155	–	–	–	–	(29,000)	107,000	110-115	185-190

Note: bandings above are in the format: £ 0-£5,000, £ 5,000-£10,000, £10,000-£15,000, £15,000-£20,000.

(1) This column only shows pension benefits for the Principal Civil Service Pension Scheme (‘PCSPS’) and Civil Servants and Other Pension Scheme (‘CSOPS’). The value of PCSPS and CSOPS pension benefits accrued during the year is calculated as (the real increase in pension multiplied by 20) plus (the real increase in any lump sum) less (the contributions made by the individual). The real increase excludes increases due to inflation or any increase or decrease due to a transfer of pension rights. This is a different basis to the way CETV in the Officials’ Pension Benefits table is calculated.

(2) Sarah Healey was paid by DCMS, her previous department, during the first month of her employment at DLUHC (February 2023).

The non-executive directors (NEDs) now receive their fees through the payroll in their capacity as Board Members in 2022-23 and details of fees paid to them during the year are shown below (subject to audit):

		Fees (£)
Non‑Executive Directors	2022-23	2021-22
Alison Nimmo (lead)	20,000	14,497
Gary Porter	15,000	12,195
Pam Chesters	17,500	17,500
Jeffrey Dodds	15,000	14,497
Tom Taylor ( joined 24 January 2023)	2,750	–
Mary Ney (left 10 October 2022)	7,500	15,000
Michael Jary (left 31 March 2022)	–	20,000

Salary

‘Salary’ includes gross salary; overtime; reserved rights to London weighting or London allowances; recruitment and retention allowances; private office allowances and any other allowance to the extent that it is subject to UK taxation. This report is based on accrued payments made by the Department and thus recorded in these accounts. In respect of Ministers in the House of Commons, departments bear only the cost of the additional Ministerial remuneration; the salary for their services as an MP £81,932 (from 1 April 2020) and various allowances to which they are entitled are borne centrally. However, the arrangement for Ministers in the House of Lords is different in that they do not receive a salary but rather an additional remuneration, which cannot be quantified separately from their Ministerial salaries. This total remuneration, as well as the allowances to which they are entitled, is paid by the Department and is therefore shown in full in the figures above.

Benefits in Kind

The monetary value of benefits in kind covers any benefits provided by the department and treated by HM Revenue and Customs as a taxable emolument.

Bonuses

Bonuses are based on performance levels attained and are made as part of the appraisal process. Bonuses relate to the performance in the year in which they become payable to the individual. The bonuses reported in 2022-23 relate to performance in 2021-22 and the comparative bonuses reported for 2021-22 relate to the performance in 2020-2021.

Fair Pay Disclosure (subject to audit)

Reporting bodies are required to disclose the relationship between the remuneration of the highest-paid director in their organisation and the median remuneration of the organisation’s workforce.

The banded remuneration of the highest paid board member in the department, the department’s Permanent Secretary, in the financial year 2022-23 was £170,000 – £175,000 (2021-22: Permanent Secretary, £160,000- £165,000), a percentage change of 6% year on year. This was 3.7 times (2021-22: 4.0 times) the median remuneration of the workforce, which was £46,727 (2021-22: £41,098). By comparison, the average change in salary for employees as a whole was an increase of 14%, with the average bonus paid increasing by 4%.

Remuneration of employees ranged from £15,000 – £20,000 to £190,000 to £195,000 (2021-22: £15,000 – £20,000 to £165,000 – £170,000). Total remuneration includes salary, non-consolidated performance-related pay and benefits in‑kind. It does not include severance payments, employer pension contributions and the cash equivalent transfer value of pensions. The median salary for 2022-23 has increased by £5,629 compared to the 2021-22 median salary, a percentage change of 14% year on year.

Non‑Executive Directors	2022-23	2021-22
Band of highest paid board member’s total remuneration	170-175	160-165
Median remuneration of the workforce	46,727	41,098
Ratio	3.7	4.0
75% Percentile Remuneration	58,076	54,674
Ratio	3.0	3.0
25% Percentile Remuneration	35,064	33,210
Ratio	4.9	4.9
Lowest paid individual	18,304	18,200

The movement in the median pay ratio for this financial year is in line with the broader pay, reward and progression policies of the department, as explained in the following sentences:

The banded salary of the Department’s highest paid board member increased slightly on last year owing to the appointment of a new Permanent Secretary during 2022-23. The increase in the median remuneration of the workforce is influenced by a number of factors, most notably the expansion of the Department’s workforce to meet new Levelling Up priorities and a marginal increase in the annual pay remit for staff at delegated grades compared with previous years.

In 2022-23, no employees (2021-22, one) received remuneration in excess of the highest-paid board member.

Ministerial Pension Benefits (subject to audit)

The table below shows the Parliamentary Contributory Pension Fund (‘PCPF’) pension benefits accrued by ministers who have served as board members of the department during the 2022-23 reporting year:

	Accrued pension at age 65 as at 31/03/23 £’000	Real increase in pension at age 65 £’000	CETV(1) at 31/03/23 £’000	CETV(1) at 31/03/22 £’000	Real increase in CETV £’000
The Rt Hon Michael Gove MP	35-40	0-2.5	300	256	6
Lord Stephen Greenhalgh	–	–	–	–	–
Dehenna Davison MP	0-5	0-2.5	2	0	1
Felicity Buchan MP	0-5	0-2.5	3	1	1
Baroness Jane Scott	0-5	0-2.5	56	45	5
Lee Rowley MP	0-5	0-2.5	5	3	1
Rachel Maclean MP	0-5	0-2.5	19	17	1
The Rt Hon Greg Clark MP	10-15	0-2.5	177	167	2
The Rt Hon Simon Clarke MP	0-5	0-2.5	13	11	1
Lord Richard Harrington	–	–	–	–	–
Kemi Badenoch MP	0-5	0-2.5	14	12	1
Stuart Andrew MP	0-5	0-2.5	28	25	1
Eddie Hughes MP	0-5	0-2.5	14	11	1
Neil O’Brien MP	0-5	0-2.5	3	2	–
Andrew Stephenson MP	0-5	0-2.5	27	26	–
Lia Nici-Townend MP	0-5	0-2.5	1	0	1
Marcus Jones MP	0-5	0-2.5	29	27	1
Paul Scully MP	0-5	0-2.5	17	14	2
Lucy Frazer MP	0-5	0-2.5	42	39	1

(1) CETV stands for Cash Equivalent Transfer Value

Ministerial pensions

Pension benefits for Ministers are provided by the Parliamentary Contributory Pension Fund (PCPF). The scheme is made under statute and the rules are set out in the Ministers’ etc. Pension Scheme 2015, available at http://qna.files.parliament.uk/ws-attachments/170890/original/PCPF%20MINISTERIAL%20SCHEME%20FINAL%20RULES.doc.

Those Ministers who are Members of Parliament may also accrue an MP’s pension under the PCPF (details of which are not included in this report). A new MP’s pension scheme was introduced from May 2015, although members who were MPs and aged 55 or older on 1 April 2013 have transitional protection to remain in the previous MP’s final salary pension scheme.

Benefits for Ministers are payable from State Pension age under the 2015 scheme. Pensions are re-valued annually in line with Pensions Increase legislation both before and after retirement. The contribution rate from May 2015 is 11.1% and the accrual rate is 1.775% of pensionable earnings.

The figure shown for pension value includes the total pension payable to the member under both the pre- and post-2015 Ministerial pension schemes.

The Cash Equivalent Transfer Value (CETV)

This is the actuarially assessed capitalised value of the pension scheme benefits accrued by a member at a particular point in time. The benefits valued are the member’s accrued benefits and any contingent spouse’s pension payable from the scheme. A CETV is a payment made by a pension scheme or arrangement to secure pension benefits in another pension scheme or arrangement when the member leaves a scheme and chooses to transfer the pension benefits they have accrued in their former scheme. The pension figures shown relate to the benefits that the individual has accrued as a consequence of their total Ministerial service, not just their current appointment as a Minister. CETVs are calculated in accordance with The Occupational Pension Schemes (Transfer Values) (Amendment) Regulations 2008 and do not take account of any actual or potential reduction to benefits resulting from Lifetime Allowance Tax which may be due when pension benefits are taken.

The real increase in the value of the CETV

This is the element of the increase in accrued pension funded by the Exchequer. It excludes increases due to inflation and contributions paid by the Minister. It is worked out using common market valuation factors for the start and end of the period.

CETV Figures

CETV figures are calculated using the guidance on discount rates for calculating unfunded public service pension contribution rates that was extant at 31 March 2023. HM Treasury published updated guidance on 27 April 2023; this guidance will be used in the calculation of 2023-24 CETV figures.

Officials’ Pension Benefits (subject to audit)

The table below shows the PCSPS and CSOPS pension benefits accrued by officials who have served as board members of the department during the 2022-23 reporting year.

Officials	Accrued pension at pension age as at 31/03/23 and related lump sum £’000	Real increase in pension and related lump sum at pension age £’000	CETV at 31/03/23 £’000	CETV at 31/03/22 £’000	Real increase in CETV £’000
Sarah Healey	50 - 55 plus a lump sum of 75 - 80	0 - 2.5 plus a lump sum of 0	792	768	1
Kate O’Neill Director, Strategy and Private Offices (appointed 09 November 2022)	30-35	0-2.5	359	339	-1
Matt Thurstan	50-55	0-2.5	659	592	-1
Emran Mian	30 - 35	0 - 2.5	394	344	8
Catherine Frances	35-40	0-2.5	545	484	4
Richard Goodman	15-20	2.5-5	160	128	17
Will Garton	35-40	5-7.5	431	333	57
Simon Claydon	45 - 50 plus a lump sum of 90 - 95	0 plus a lump sum of 0	850	784	-26
Kay Withers	20-25	0-2.5	232	207	9
Jeremy Pocklington	70 - 75 plus a lump sum of 30 - 35	0 - 2.5 plus a lump sum of 0	1,091	999	-14
Sue Gray	85 - 90 plus a lump sum of 255 - 260	0 plus a lump sum of 0	1,879	1,781	-29

Some prior year CETVs have been adjusted for retrospective changes to pension data.

Taking account of inflation, the CETV funded by the employer has decreased in real terms in some cases.

Civil Service Pensions

Pension benefits are provided through the Civil Service pension arrangements. From 1 April 2015 a new pension scheme for civil servants was introduced – the Civil Servants and Others Pension Scheme or alpha, which provides benefits on a career average basis with a normal pension age equal to the member’s State Pension Age (or 65 if higher). From that date all newly appointed civil servants and the majority of those already in service joined alpha. Prior to that date, civil servants participated in the Principal Civil Service Pension Scheme (PCSPS). The PCSPS has four sections: 3 providing benefits on a final salary basis (classic, premium or classic plus) with a normal pension age of 60; and one providing benefits on a whole career basis (nuvos) with a normal pension age of 65.

These statutory arrangements are unfunded with the cost of benefits met by monies voted by Parliament each year. Pensions payable under classic, premium, classic plus, nuvos and alpha are increased annually in line with Pensions Increase legislation. Existing members of the PCSPS who were within 10 years of their normal pension age on 1 April 2012 remained in the PCSPS after 1 April 2015. Those who were between 10 years and 13 years and 5 months from their normal pension age on 1 April 2012 switch into alpha sometime between 1 June 2015 and 1 February 2022. Because the Government plans to remove discrimination identified by the courts in the way that the 2015 pension reforms were introduced for some members, eligible members with relevant service between 1 April 2015 and 31 March 2022 may be entitled to different pension benefits in relation to that period (and this may affect the Cash Equivalent Transfer Values shown in this report – see below). All members who switch to alpha have their PCSPS benefits ‘banked’, with those with earlier benefits in one of the final salary sections of the PCSPS having those benefits based on their final salary when they leave alpha. (The pension figures quoted for officials show pension earned in PCSPS or alpha – as appropriate. Where the official has benefits in both the PCSPS and alpha the figure quoted is the combined value of their benefits in the two schemes.) Members joining from October 2002 may opt for either the appropriate defined benefit arrangement or a defined contribution (money purchase) pension with an employer contribution (partnership pension account).

Employee contributions are salary-related and range between 4.6% and 8.05% for members of classic, premium, classic plus, nuvos and alpha. Benefits in classic accrue at the rate of 1/80th of final pensionable earnings for each year of service. In addition, a lump sum equivalent to three years initial pension is payable on retirement. For premium, benefits accrue at the rate of 1/60th of final pensionable earnings for each year of service. Unlike classic, there is no automatic lump sum. classic plus is essentially a hybrid with benefits for service before 1 October 2002 calculated broadly as per classic and benefits for service from October 2002 worked out as in premium. In nuvos a member builds up a pension based on his pensionable earnings during their period of scheme membership. At the end of the scheme year (31 March) the member’s earned pension account is credited with 2.3% of their pensionable earnings in that scheme year and the accrued pension is uprated in line with Pensions Increase legislation. Benefits in alpha build up in a similar way to nuvos, except that the accrual rate in 2.32%. In all cases members may opt to give up (commute) pension for a lump sum up to the limits set by the Finance Act 2004.

The partnership pension account is an occupational defined contribution pension arrangement which is part of the Legal & General Mastertrust. The employer makes a basic contribution of between 8% and 14.75% (depending on the age of the member). The employee does not have to contribute, but where they do make contributions, the employer will match these up to a limit of 3% of pensionable salary (in addition to the employer’s basic contribution). Employers also contribute a further 0.5% of pensionable salary to cover the cost of centrally-provided risk benefit cover (death in service and ill health retirement).

The accrued pension quoted is the pension the member is entitled to receive when they reach pension age, or immediately on ceasing to be an active member of the scheme if they are already at or over pension age. Pension age is 60 for members of classic, premium and classic plus, 65 for members of nuvos, and the higher of 65 or State Pension Age for members of alpha. (The pension figures quoted for officials show pension earned in PCSPS or alpha – as appropriate. Where the official has benefits in both the PCSPS and alpha the figure quoted is the combined value of their benefits in the two schemes, but note that part of that pension may be payable from different ages.)

Further details about the Civil Service pension arrangements can be found at the website www.civilservicepensionscheme.org.uk

Cash Equivalent Transfer Values

A Cash Equivalent Transfer Value (CETV) is the actuarially assessed capitalised value of the pension scheme benefits accrued by a member at a particular point in time. The benefits valued are the member’s accrued benefits and any contingent spouse’s pension payable from the scheme. A CETV is a payment made by a pension scheme or arrangement to secure pension benefits in another pension scheme or arrangement when the member leaves a scheme and chooses to transfer the benefits accrued in their former scheme. The pension figures shown relate to the benefits that the individual has accrued as a consequence of their total membership of the pension scheme, not just their service in a senior capacity to which disclosure applies.

The figures include the value of any pension benefit in another scheme or arrangement which the member has transferred to the Civil Service pension arrangements. They also include any additional pension benefit accrued to the member as a result of their buying additional pension benefits at their own cost. CETVs are worked out in accordance with The Occupational Pension Schemes (Transfer Values) (Amendment) Regulations 2008 and do not take account of any actual or potential reduction to benefits resulting from Lifetime Allowance Tax which may be due when pension benefits are taken.

Real increase in CETV

This reflects the increase in CETV that is funded by the employer. It does not include the increase in accrued pension due to inflation, contributions paid by the employee (including the value of any benefits transferred from another pension scheme or arrangement) and uses common market valuation factors for the start and end of the period.

Compensation for loss of office (subject to audit)

No Ministers or Board members received compensation for loss of office in the year.

In line with the Constitutional Reform and Governance Act 2010 and the Model Contract for Special Advisers, a Special Adviser’s appointment automatically ends when their appointing Minister leaves office. Special Advisers are not entitled to a notice period but receive contractual termination benefits to compensate for this.

Termination benefits are based on length of service and capped at six months’ salary. If a Special Adviser returns to work for HM Government following the receipt of a severance payment, the payment is required to be repaid, less a deduction in lieu of wages for the period until their return. Termination costs for Special Advisers are reported in the Cabinet Office Annual Report and Accounts

Reporting of civil service and other compensation schemes – exit packages (subject to audit)

In the core department and Agency, redundancy and other departure costs have been paid in accordance with the provisions of the Civil Service Compensation Scheme, a statutory scheme made under the Superannuation Act 1972. Exit costs are accounted for in full when the exit has been agreed in accordance with IAS 19 and 37. Where the department has agreed early retirements, the additional costs are met by the department and not by the Civil Service pension scheme. Ill health retirement costs are met by the pension scheme and are not included in the table.

Staff employed by other bodies in the Departmental Group are not civil servants and redundancy and other departure costs are paid in accordance with the rules applying to the bodies in question. Further details are in the accounts of the bodies concerned.

			2022-23	2021-22			2022-23	2021-22
				Core Department and Agency				Departmental Group
Exit package cost band	Number of compulsory redundancies	Number of other departures agreed	Total number of exit packages by cost band	Total number of exit packages by cost band	Number of compulsory redundancies	Number of other departures agreed	Total number of exit packages by cost band	Total number of exit packages by cost band
<£10,000	-	-	-	-	-	-	-	-
£10,000 - £25,000	-	-	-	-	-	-	-	-
£25,000 - £50,000	-	1	1	1	-	1	1	1
£50,000 - £100,000	-	1	1	-	-	1	1	-
£100,000 - £150,000	-	-	-	-	-	-	-	-
£150,000 - £200,000	-	-	-	-	-	-	-	-
£200,001 onwards	-	-	-	-	-	-	-	-
Total number of exit packages	-	2	2	1	-	2	2	1
			£’000	£’000			£’000	£’000
Total cost	-	142	142	28	–	142	142	28

Staff report

The Staff Report relates to the core department. Information on ALBs can be found in their published Annual Reports.

Creating a new department

Following DLUHC’s creation in 2021, our focus in 2022-23 was on developing our vision and ambition for how we work as a department, and on ensuring that we had an effective and efficient internal set-up. The new DLUHC vision was launched in December 2022; we engaged our workforce on how they connect and contribute to it. Over the year we also worked to ensure our organisational design was fit for purpose and aligned with our vision. As we look ahead to the next year, we will be working to maintain the organisational health of DLUHC, making sure we are resilient and agile, able to respond to new priorities and deliver in an efficient manner. In 2023-24 we will launch a new People Strategy which will align with our vision and our related Capabilities, Diversity and Inclusion, Places for Growth and Workforce plans.

Resourcing

The department filled over 600 roles during 2022-23 in support of new priorities (and to replace roles lost through natural turnover). The department grew by around 200 full-time equivalent (FTE) staff in Q1 and Q2. This growth facilitated the delivery of the Homes for Ukraine programme, helped build our Investment Zones Team to support our levelling-up mission, and aided delivery of our Electoral Integrity and Safer & Greener Buildings Programmes. Our recruitment efforts continued to support our wider levelling-up work across the UK as set out in the Levelling-Up White Paper.

The department focused on implementing efficiencies later in the year in accordance with our SR21 settlement agreement, without compromising our ambitious delivery agenda. Through the effective use of recruitment controls we were able to stabilise and reduce the size of the department by approximately 6% (200 roles) by the end of the year. During this period, we retained the flexibility to bring in skills that we needed to deliver our priorities. Looking ahead, we will continue to recruit the skills required to support delivery and in a way which supports our Places for Growth ambitions.

Capabilities

Our 2022-23 (“Year Two”) Capability Delivery Plan committed to building upon the foundational activity in 2021-22, maturing our learning culture and ensuring that our activity enabled delivery of the Declaration on Government Reform.

We focused on the following areas ; strengthening our professions, senior leadership development, digital capability improvement and increasing secondments and interchange. An SCS specific development plan will be delivered in 2023‑24.

Professional capability was built through a range of initiatives, and our senior leadership development was strengthened through a bespoke Leadership Development Offer to our SCS cadre.

Progress on digital capability included a coaching and mentoring portal and improved capture of professions data. Other improvements included significant upgrades to the DLUHC Learning Hub and publication of online management information (MI) dashboards for Learning Participation and Spend and Performance and Development. DLUHC also introduced the Digital, Data and Technology (DDaT) Pay Framework in August 2022. This framework enabled the Department to make adjustments to pay linked to an agreed formal capability assessment process, strengthening the ability of the Department to attract and retain key digital skills.

A stretching cross-government commitment to grow secondments to 10% of SCS and 5% of G6-7 workforce was achieved in Q3 2022-23, two months ahead of target.

Other achievements during the year included:

a. DLUHC’s first Learning Festival in May 2022;

b. New products in 2022-23 included our Advanced personal effectiveness offer and a new Team Learning Charter;

c. A refreshed Apprenticeships Strategy saw apprenticeship numbers rise to 2.8% of workforce (exceeding our 2.5% target) at March 2023.

d. Face-to- face learning was reintroduced, focussing on events in London, Wolverhampton and Birmingham.

Places for Growth

We progressed well against our plans to have more roles based across the UK, outside London, closer to more of the communities we serve. By March 2023, we had 1,146 staff based outside London, which equates to 35% of our workforce, an increase of over 600, up c.120%, from the baseline of March 2020. Colleagues based outside London now make up over 1 in 3 of all employees compared to less than 1 in 4 in 2020. In the same period the number of Senior Civil Servants outside London more than quadrupled, from 7 to 30 which equates to 15% of our senior roles. We remained committed to have at least 1,250 employees based outside London, including 37.5% of our Senior Civil Servants by 2025, rising to 50%, by 2030.

In moving roles out of London, we made a deliberate choice to support and contribute substantively to levelling up, exemplified by our second headquarters in Wolverhampton, and our participation in the Darlington Economic Campus where, across both sites, we now have c.300 roles in place. Our offices in Edinburgh, Cardiff and Belfast enable and support our lead role for the Union.

Smarter Working

Smarter Working has remained a priority for DLUHC through 2022-23, with a continued focus on improving our workspaces, technology and building office communities. In August 2022 DLUHC was formally recognised by Cabinet Office as having achieved the highest level of Smarter Working Maturity. We developed the Smarter Working Labs concept to support colleagues to make their space work better and to help build their capability and have successfully delivered it in two of our offices. Our London office refurbishment commenced and will be completed in 2023.

Diversity & Inclusion

Diversity and inclusion continued to be a priority for the department. We remained focused on three strategic aims which were to bring in, bring on and develop diverse talent and on building a fully inclusive culture.

A representative workforce remains one of our priorities. Representation of staff is benchmarked to the UK economically active population (those aged 16-64 who were either working or looking for work).

We improved the overall representation of women in DLUHC to 53%, significantly above the 50% gender parity value and the rate in the economically active population (48%). We also improved representation in the Senior Civil Service of females, disabled and ethnic minority colleagues over the year and maintained or improved representation in the overall workforce in these measures too.

Our ambition remained to sustain these rates of representation at or above the UK economically active population and lift those that are below. Of these we are currently 1 percentage point below the rate of disabled people in the economically active population and 6 percentage points above the rate of ethnic minority people in the economically active population.

We also sought to improve the rates of employees from a lower socio-economic background, focused on parental occupation as recommended by the Social Mobility Commission. We maintained a clear commitment to reducing bullying, harassment, and discrimination and to improve our fair treatment scores as measured in the annual Civil Service People Survey. DLUHC has a modest gender pay gap compared to other Whitehall departments. The latest report showed that the pay gap for the DLUHC group reduced since the previous reporting period. We remain committed to reducing this gap further. A copy of the latest report can be accessed here – https://www.gov.uk/government/publications/dluhc-gender-pay-gap-report-and-data-2022/dluhcs-gender-pay-gap-report-2022.

Staff Data

Gender Diversity

The department’s gender diversity statistics are shown in the graph below. In November 2022 we published data on our gender pay gap in line with other employers^{[footnote 24]}. The DLUHC Group gender pay gap data for 31 March 2023 will be published in November 2023 as part of a co-ordinated publication exercise across all Whitehall departments. The chart only includes staff that are on the departmental payroll.

Staff Diversity by Gender – Core Department as at 31st March 2023

Health and Safety Management

The Department’s safety performance has remained consistent and diligent during 2022-23. No accidents were reported to the Health and Safety Executive under Reporting of Injuries, Diseases and Dangerous Occurrences Regulations 2013 (RIDDOR) in 2022-23 (none in 2021-22), while a total of three accidents were reported by employees in 2022-23 against two in 2021-22. Working with facilities management colleagues, mitigations have now been put in place for the three reported accidents.

Average Working Days Lost

	Jan – Dec 2022	Jan – Dec 2021 (AWDL)(1, 2)
Civil Service	TBC	7.9
Core Department	4.0	3.6
Executive Agency	4.5	4.0

(1) AWDL: Average working days lost.

(2) Civil Service AWDL is based on April 2021 – March 2022 data

Staff with no sickness absence

	Jan-Dec 2022	Jan-Dec 2021
Core Department	67%	76%
Executive Agency	64%	74%

Trade Union Facility time

The following data relates to both the core department and executive agency (Planning Inspectorate).

Relevant union officials

	Full-time equivalent employee number
Number of employees who were relevant union officials during 1 April 2022 – 31 March 2023	40

Percentage of time spent on facility time

Percentage of time	Number of employees
0%	22
1-50%	18
51%-99%	-
100%	-

Percentage of pay bill spent on facility time

	Figures
Total cost of facility time	£147,067
Total pay bill	£276,010,000
Percentage of the total pay bill spent on facility time	0.06%

Paid trade union activities

Time spent on paid trade union activities as a percentage of total paid facility time hours

0%

Some relevant union officials did not spend facility time on union activities.

Staff Turnover Percentage

Staff turnover for the department for 2022-23 was 21.4% (2021-22: 16.3%), in line with the Cabinet Office definition, includes all staff who have left the Civil Service.

Senior Civil Service salaries and staffing

At 31 March 2023 there were 175 Senior Civil Service staff including the Permanent Secretary on the core department’s payroll. This includes staff receiving temporary responsibility allowance at an SCS pay band.

Staff numbers and related costs (subject to audit)

The following sections below have been subject to audit: staff costs, average number of full time equivalent persons employed, and reporting of civil service and other compensation schemes.

Staff costs

					£’000
				2022-23	2021-22
	Permanently Employed Staff	Others	Ministers	Total	Total
Wages & Salaries	270,643	35,368	229	306,240	269,702
Social Security Costs	35,441	–	25	35,466	31,683
Pension Costs	95,985	–	–	95,985	94,260
Other	-	-	-	-	-
Total Costs	402,069	35,368	254	437,691	395,645§
Less Recoveries in respect of outward secondments	(3,023)	–	–	(3,023)	(2,592)
Total Net Costs	399,046	35,368	254	434,668	393,053
Of which:				-
Core Department	216,606	9,640	254	226,500	198,621
Agency	47,771	1,739	–	49,510	45,446
Designated Bodies	137,692	23,989	–	161,681	151,578

Special Advisers are temporary civil servants. In order to improve efficiency, the administration of staff costs for all Special Advisers across government is managed by the Cabinet Office, with corresponding budget cover transfers. Therefore all Special Adviser costs are reported in the Cabinet Office Annual Report and Accounts. Special Advisers remain employed by the respective Department of their appointing Minister.

Average number of full-time equivalent persons employed

					2022-23	2021-22
	Permanent staff	Others	Ministers	Special Ad visers	Total	Total
Core Department	2,929	424	7	5	3,365	2,931
Agency	763	20	–	–	783	760
Designated Bodies	1,965	189	–	–	2,154	2,014
Total	5,657	633	7	5	6,302	5,705

This is the annual average based on month end full time equivalent staff numbers, except for Special Advisors where we have been instructed to report the total at 31 March 2023 to ensure consistency of reporting with other government departments. The average number of Special Advisors was 6.

Although administered through Cabinet Office payroll, Special Advisors continue to be employed by the appointing Minister. Therefore Special Advisors are included when reporting staff numbers.

Staff redeployments

In accordance with Transfers within the Civil Service (February 2019), short-term staff loans of up to six months remained on the payroll and terms and conditions of their home department and the host department bore no responsibility for the costs of the loaned staff.

Number of staff	Inward (Hosted)	Outward (Loaned)	Total
Administrative Officers	0	0	0
Executive/Higher Executive Officers	1	0	1
Senior Executive Officers	2	0	2
Grade 7/6	3	0	3
Senior Civil Service	0	0	0
Total secondments	6	0	6

Average duration (months)	Inward (Hosted)	Outward (Loaned)	Total
Administrative Officers	0	0	0
Executive/Higher Executive Officers	3	0	3
Senior Executive Officers	4	0	4
Grade 7/6	12	0	12
Senior Civil Service	0	0	0
All grades	8	0	8

Expenditure on Consultancy and Temporary Staff

				£000
	2022-23 £000	2021-22 £000	2020-21 £000	2019-20 £000
Cost of Contingent Labour
Core Department	8,024	7,702	4,991	5,992
Executive Agency	3,303	1,872	1,659	2,476
NDPBs	21,335	16,113	16,106	7,302
Total	32,661	25,687	22,756	15,771
Cost of Consultancy
Core Department	13,722	15,270	19,544	4,898
Executive Agency	10	–	–	106
NDPBs	923	1,483	604	225
Total	14,655	16,753	20,148	5,229
Overall Total	47,316	42,440	42,904	20,999

Contingent labour – This is the provision of workers to cover business-as-usual or service delivery activities within an organisation. Temporary Staff are also often referred to as “Contingent Labour”.

Consultancy staff – This is the provision to management of objective advice relating to strategy, structure, management or operations of an organisation, in pursuit of its purposes and objectives. Such advice will be provided outside the business-as-usual environment when in-house skills are not available and will be time-limited.

Consultancy services supplied to the Department supported programmes including the Building Safety programme and Levelling Up and other areas where specialist knowledge not held within the Department is required. The majority of contingent labour related to Digital, Analysis and Data and Communications.

Reporting the tax arrangements of public sector appointees

As part of the Review of Tax Arrangements of Public Sector Appointees published by the Chief Secretary to the Treasury on 23 May 2012, departments and their arm’s length bodies must publish information on their highly paid and senior offpayroll engagements.

The Department has seen an increase due to critical expertise required in areas such as Building Safety, SAP finance, Digital, and the Holocaust Memorial teams, requiring the specialist skills not readily available across the Department or Civil Service. These skills include building standards expertise and knowledge, expertise of SAP finance systems, as well as digital architect, software and developer skills. There has been difficulty recruiting to long enduring roles permanently due to the limited supply and high demand for these skillsets within the current labour market.

Agency numbers refer to off-payroll engagements in the Planning Inspectorate. Engagements include the services of Non-salaried Inspectors, providing necessary flexibility in the Inspector workforce. The remainder of the engagements supported requirements as part of organisational transformation.

ALB figures refer to Homes England, using off-payroll arrangements for specialist or technical contractors and consultants to address urgent scarce skills gaps.

Off-payroll engagements as of 31 March 2023, for more than £245 per day and that last for longer than six months

	Main Department	Agency	ALBs
No. of existing engagements as of 31 March 2023 of which have existed for:	57	17	176
less than one year at time of reporting	16	15	142
between one and two years at time of reporting	32	1	17
between two and three years at time of reporting	4	1	13
between three and four years at time of reporting	0	0	4
four years or more at time of reporting	5	0	0

All temporary off-payroll appointments engaged at any point during the year ended 31 March 2023 and earning at least £245 per day

	Main Department	Agency	ALBs
No. of off-payroll workers engaged during the year ended 31 March 2023	91	131	261
Of which:
No. determined as in-scope of IR35	75	49	261
No. determined as out-of-scope of IR35	16	82	0
No. of engagements reassessed for compliance or assurance purposes during the year	91	131	0
Of which:
No. of engagements reassessed for consistency/assurance purposes during the year.	41	104	0
No. of engagements that saw a change to IR35 status following the consistency review.	0	0	0
Of which:
No. of engagements that saw a change to IR35 status following review §	0	0	0

All temporary off-payroll engagements of board members, and/or, senior officials with significant financial responsibility, between 1 April 2022 and 31 March 2023

	Main Department	Agency	ALBs
No. of off-payroll workers engaged during the year ended 31 March 2023	0	0	1
Of which:
No. determined as in-scope of IR35	0	0	0
No. determined as out-of-scope IR35	0	0	0
No. of engagements reassessed for compliance or assurance purposes during the year	0	0	0
Of which:
No. of engagements reassessed for consistency/assurance purposes during the year.	0	0	0
No. of engagements that saw a change to IR35 status following the consistency review.	0	0	0
Of which:
No. of engagements that saw a change to IR35 status following review	0	0	0

Off-payroll engagements of board members, and/or, senior officials with significant financial responsibility, between 1 April 2022 and 31 March 2023

	Main Department	Agency	ALBs
No. of off-payroll engagements of board members, and/or senior official with significant financial responsibility, during the financial year	0	0	1
Total no. of individuals both on and off-payroll that have been deemed “board members and/or senior officials with significant financial responsibility” during the financial year	12	0	20

Parliamentary accountability and audit report

Introduction

The Parliamentary Accountability and Audit Report includes three sections: the Statement of Outturn against Parliamentary Supply, Parliamentary Accountability Disclosures and the Certificate and Report of the Comptroller and Auditor General. This introduction provides further detail on the figures presented in the Statement of Outturn against Parliamentary Supply and in the Core Tables of the Parliamentary Accountability Disclosure section.

The department’s spending is shown in two presentations in the Annual Report and Accounts.

The Parliamentary Accountability and Audit Report presents the department’s spend against the budgets set by Parliament in Supply Estimates. The final budgets for the year were set in the Supplementary Estimates^{[footnote 25]}.

The department’s budgets follow the international standards of the European System of Accounts (ESA). This allows HM Treasury to produce compliant National Accounts capable of international comparison.

The Financial Statements meanwhile apply International Financial Reporting Standards (IFRS) as adapted for government by the Financial Reporting Manual (FReM).

The diagram below shows how total spending from one presentation relates to the other. A more detailed reconciliation between resource expenditure shown in the Statement of Outturn against Parliamentary Supply (SoPS) 1.1 and net operating expenditure in the Statement of Comprehensive Net Expenditure in the Financial Statements can be found in Statement of Parliamentary Supply (SoPS) 2 below.

The Department’s Budget and Outturn

The diagram below shows the department’s control totals which are the budget totals that we must not breach and which are set in Supply Estimates. The department has two Resource DEL control totals, one for the funding we provide to local government on behalf of central government and one for the department’s own spending. These and other control totals are set out in the diagram below.

SoPS 1.1 and SoPS 1.2 report expenditure against each DEL or AME budgetary control limit, split by specific area of departmental expenditure, for example Housing & Planning or Troubled Families. SoPS 1.1 reports resource expenditure and SoPS 1.2 reports capital expenditure. The specific areas of departmental expenditure in budgets are called estimate rows. The Core Tables on page 97 present expenditure at the same level of detail (i.e. by estimate row) and on the same basis as SoPS 1.1 and SoPS 1.2 over a four year period.

The table on the next page shows the main streams of expenditure contained within each estimate row presented in SoPS 1.1, SoPS 1.2 and the Core Tables. Costs classified as administration expenditure by HM Treasury are all incurred within Communities Resource DEL. The administration expenditure Core Table provides a subset of figures from the Departmental Resource Spending Core Table. The Administration Costs table in the SoPS provides a subset of figures from the summary of Resource and Capital Outturn table and SoPS 1.1.

Estimate Row	Main Expenditure Streams
Communities DEL Estimate Rows
A: Local Government & Public Services	Homes for Ukraine Rough Sleeping Accommodation Changing Futures London Settlement Grenfell Site & Programme Integration
B: Housing and Planning	Remediation Delivery New Homes Bonus Homelessness Prevention Grant PFI Housing Grants Rough Sleeping Initiative Housing Infrastructure Fund Expenditure of the Planning Inspectorate
C: Local Growth and Devolution	Towns Fund/Future High Streets Devolution Deals UK Shared Prosperity Fund Levelling Up Fund Brownfield Land Release Fund Freeports
D: Elections, Union and Constitution	Electoral Integrity Programme
E: Supporting Families	Supporting Families
F: Research, Data and Trading Funds	Research & Development Communications ERDF Foreign Exchange Rate (Gains)/Losses
G: DLUHC Staff, Building and Infrastructure Costs	The majority is classified as administration expenditure: Staff Pay Estates costs e.g. rent, rates, utilities
H: Local Government & Public Services (ALB)(Net)	Expenditure of the Valuation Tribunal Service (VTS) and the Commission for Local Administration in England (CLAE) – the majority of which is classified as administration expenditure.
I: Housing and Planning (ALB)(Net)	Expenditure by Homes England on programmes including: Help to Buy Affordable Homes Programme Home Building Fund Land Assembly Fund Investment income received by Homes England Administration expenditure on Homes England staff and estates Expenditure by the Leasehold Advisory Service (LAS) and The Housing Ombudsman (THO) – most of which is classified as Administration expenditure Expenditure by the Regulator of Social Housing – both Administration and Programme expenditure
J: Elections	Expenditure to Returning Officers for elections costs
Local Government DEL Estimate Rows
K: Revenue Support Grant	Revenue support grant – central government funding provided to support local government services
L: Other Grants and Payments	Business rates and council tax reliefs and support Social Care grants (including improved Better Care Fund)
M: Business Rates Retention	Payments to local authorities whose income from business rates is below a baseline level
AME Estimate Rows
N: Local Government and Public Services	Grenfell Site provision Audit Commission Pension
O: Housing & Planning; and	Impairments of non-current and financial assets
T: Housing & Planning (ALB)	Impairments and revaluations
P: Local Growth and Devolution	Impairments and revaluations
Q: DLUHC Staff, Building and Infrastructure Costs	Expenditure by the core department on creation and release/utilisation of provisions
R: Non-Domestic Rates Outturn Adjustment	Expenditure relating to year-end adjustments for business rates retention outturn
S: Local Government & Public Services (ALB)(Net)	Expenditure on pensions by the VTS and the CLAE
U: Business Rates Retention	Includes the local share of business rates collected and retained by local authorities as well other business rates retention payments and receipts

Statement of Outturn against Parliamentary Supply (subject to audit)

In addition to the primary statements prepared under IFRS, the Government Financial Reporting Manual (FReM) requires DLUHC to prepare a Statement of Outturn against Parliamentary Supply (SoPS) and supporting notes. The SoPS and related notes are subject to audit, as detailed in the Certificate and Report of the Comptroller and Auditor General to the House of Commons.

The SoPS is a key accountability statement that shows, in detail, how an entity has spent against their Supply Estimate. Supply is the monetary provision (for resource and capital purposes) and cash (drawn primarily from the Consolidated fund), that Parliament gives statutory authority for entities to utilise. The Estimate details supply and is voted on by Parliament at the start of the financial year. Should an entity exceed the limits set by their Supply Estimate, called control limits, their accounts will receive a qualified opinion.

The format of the SoPS mirrors the Supply Estimates, published on gov.uk, to enable comparability between what Parliament approves and the final outturn. The SoPS contain a summary table, detailing performance against the control limits that Parliament have voted on, cash spent (budgets are compiled on an accruals basis and so outturn won’t exactly tie to cash spent) and administration. The supporting notes detail the following: Outturn by Estimate line, providing a more detailed breakdown (note 1); a reconciliation of outturn to net operating expenditure in the SOCNE, to tie the SoPS to the Financial Statements (note 2); a reconciliation of outturn to net cash requirement (note 3); and an analysis of income payable to the Consolidated Fund (note 4).

The SOPS and Estimates are compiled against the budgeting framework, which is similar to, but different from, IFRS. An understanding of the budgeting framework and an explanation of key terms is provided on page 84 onwards and in the Our Expenditure section of the performance report on page 32. Further information on the Public Spending Framework and the reasons why budgeting rules are different from IFRS can also be found in chapter 1 of the Consolidated Budgeting Guidance, available on gov.uk^{[footnote 26]}.

The SOPS provides a detailed view of financial performance, in a form that is voted on and recognised by Parliament. The Our Expenditure section of the Performance Report page 32, provides a summarised discussion of the estimate and functions as an introduction to the SOPS disclosures.

Summary of Resource and Capital Outturn

										£’000
									2021-22	2021-22
				Outturn			Estimate		Outturn compared with Estimate: saving/(excess)	Prior year
Type of Spend	Note	Voted	Non‑Voted	Total	Voted	Non‑Voted	Total	Voted	Total	Total Outturn
Departmental Expenditure Limit (DEL) DLUHC Housing and Communities
Resource	SoPS1.1	3,863,640	(82)	3,863,558	4,379,018	7,700	4,386,718	515,378	523,160	2,764,500
Capital	SoPS1.2	6,817,765	-	6,817,765	7,155,093	-	7,155,093	337,328	337,328	6,142,371
Total		10,681,405	(82)	10,681,323	11,534,111	7,700	11,541,811	852,706	860,488	8,906,871
Departmental Expenditure Limit (DEL) DLUHC Local Government
Resource	SoPS1.1	11,772,149	-	11,772,149	11,851,896	-	11,851,896	79,747	79,747	21,262,114
Capital	SoPS1.2	-	-	-	-	-	-	-	-	-
Total		11,772,149	-	11,772,149	11,851,896	-	11,851,896	79,747	79,747	21,262,114
Annually Managed Expenditure (AME)
Resource	SoPS1.1	10,801,365	-	10,801,365	13,723,410	-	13,723,410	2,922,045	2,922,045	7,666,661
Capital	SoPS1.2	-	-	-	-	-	-	-	-	-
Total		10,801,365	-	10,801,365	13,723,410	-	13,723,410	2,922,045	2,922,045	7,666,661
Total Budget
Resource	SoPS1.1	26,437,154	(82)	26,437,072	29,954,324	7,700	29,962,024	3,517,170	3,524,952	31,693,275
Capital	SoPS1.2	6,817,765	-	6,817,765	7,155,093	-	7,155,093	337,328	337,328	6,142,371
Total Budget Expenditure		33,254,919	(82)	33,254,837	37,109,417	7,700	37,117,117	3,854,498	3,862,280	37,835,646
Total Budget and Non-Budget		33,254,919	(82)	33,254,837	37,109,417	7,700	37,117,117	3,854,498	3,862,280	37,835,646

Figures in the areas outlined in thick line cover the voted control limits voted by Parliament. Refer to the Supply Estimates guidance manual, available on gov.uk, for detail on the control limits voted by Parliament.

Net Cash Requirement

					£’000
				2022-23	2021-22
Item	SoPS Note	Outturn	Estimate	Outturn vs. Estimate: saving/(excess)	Prior Year Outturn
Net Cash Requirement	3	22,034,024	27,787,674	5,753,650	31,070,890

Administration Costs

					£’000
				2022-23	2021-22
Item	SoPS Note	Outturn	Estimate	Outturn vs. Estimate: saving/(excess)	Prior Year Outturn
Administration Costs	1.1	233,056	343,417	110,361	274,090

Although not a separate voted limit, any breach of the administration budget will also result in an excess vote.

Notes to the Statement of Outturn against Parliamentary Supply

SoPS 1. Outturn detail, by Estimate line

SoPS 1.1 Analysis of resource outturn by Estimate line

												£’000
											2022-23	2021-22
							Resource Outturn			Estimate
Type of Spend (Resource)			Administration			Programme
Spending in Departmental Expenditure Limits (RDEL) – DLUHC Housing and Communities Voted expenditure	Gross	Income	Net	Gross	Income	Net	Total	Net Total	Virements	Total inc. virements(2)	Outturn vs Estimate, saving/ (excess)	Prior Year Outturn Total
A Local Government & Public Services	–	–	–	1,284,734	(709)	1,284,025	1,284,025	1,412,065	(2,682)	1,409,383	125,358	183,865
B Housing and Planning	–	–	–	1,605,366	(25,952)	1,579,414	1,579,414	1,613,217	–	1,613,217	33,803	1,737,217
C Local Growth and Devolution	–	–	–	790,317	(269,378)	520,939	520,939	537,999	–	537,999	17,060	365,061
D Elections, Union and Constitution	–	–	–	34,735	(43)	34,692	34,692	32,010	2,682	34,692	-	–
E Supporting Families	-	-	-	206,828	–	206,828	206,828	207,465	–	207,465	637	168,278
F Research, Data and Trading Funds	-	-	-	9,237	(4,462)	4,775	4,775	16,530	–	16,530	11,755	(25,809)
G DLUHC Staff, Building and Infrastructure Costs	263,330	–	263,330	24,596	(2,663)	21,933	285,263	289,779	–	289,779	4,516	267,683
H Local Government & Public Services (ALB) (Net)(1)	17,763	–	17,763	–	–	–	17,763	17,959	-	17,959	196	17,925
I Housing and Planning (ALB) (Net)(1)	(48,037)	–	(48,037)	(22,022)	–	(22,022)	(70,059)	251,994	–	251,994	322,053	(4,649)
Total Voted DEL	233,056	**– **	233,056	3,933,791	(303,207)	3,630,584	3,863,640	4,379,018	–	4,379,018	515,378	2,709,571
Non-voted expenditure
Returning Officers’ expenses England, Wales and Scotland
J Elections	–	–	–	(82)	–	(82)	(82)	7,700	–	7,700	7,782	54,929
Total non-voted DEL	–	–	–	(82)	–	(82)	(82)	7,700	–	7,700	7,782	54,929
Total spending in RDEL – DLUHC Housing and Communities	233,056	–	233,056	3,933,709	(303,207)	3,630,502	3,863,558	4,386,718	–	4,386,718	523,160	2,764,500

(1) Expenditure and income on these estimate rows are presented net in the Gross column per HMT Treasury guidance. All other estimate rows present expenditure and income separately: expenditure in the Gross column and income in the Income column.

(2) Parliament does not vote on how budget within a control total is distributed across the estimate row sub-headings. As a result, and per the HMT Supply Estimates Manual, the department has discretion to move budget between estimate rows via ‘virements’.

(3) A breakdown of Returning Officers expense under “Elections” is provided in Annex B, from page 174.

												£’000
											2022-23	2021-22
							Resource Outturn			Estimate
Type of Spend (Resource)			Administration			Programme
Spending in RDEL – DLUHC Local Government Voted expenditure	Gross	Income	Net	Gross	Income	Net	Total	Net Total	Virements	Total inc. virements(2)	Outturn vs Estimate, saving/ (excess)	Prior Year Outturn Total
K Revenue Support Grant	–	–	–	1,672,058	–	1,672,058	1,672,058	1,672,058	–	1,672,058	–	1,621,557
L Other Grants and Payments	–	–	–	10,010,575	2,046	10,012,621	10,012,621	10,092,368	–	10,092,368	79,747	19,603,675
M Business Rates Retention	–	–	–	87,470	–	87,470	87,470	87,470	–	87,470	–	36,882
Total Spending in RDEL – DLUHC Local Government	–	–	–	11,770,103	2,046	11,772,149	11,772,149	11,851,896	–	11,851,896	79,747	21,262,114
Total spending in RDEL	233,056	-	233,056	15,703,812	(301,161)	15,402,651	15,635,707	16,238,614	-	16,238,614	602,907	24,026,614

(1) Expenditure and income on these estimate rows are presented net in the Gross column per HMT Treasury guidance. All other estimate rows present expenditure and income separately: expenditure in the Gross column and income in the Income column.

(2) Parliament does not vote on how budget within a control total is distributed across the estimate row sub-headings. As a result, and per the HMT Supply Estimates Manual, the department has discretion to move budget between estimate rows via ‘virements’.

												£’000
											2022-23	2021-22
							Resource Outturn			Estimate
Type of Spend (Resource)			Administration			Programme
Spending in Annually Managed Expenditure (RAME) Voted expenditure	Gross	Income	Net	Gross	Income	Net	Total	Net Total	Virements	Total inc. virements(2)	Outturn vs Estimate, saving/ (excess)	Prior Year Outturn Total
N Local Government and Public Services	–	–	–	(36,220)	–	(36,220)	(36,220)	389,618	(14,443)	375,175	411,395	49,077
O Housing and Planning	–	–	–	3,674	(1,251)	2,423	2,423	121,878	-	121,878	119,455	(8,028)
P Local Growth and Devolution	–	–	–	4,192	(26,335)	(22,143)	(22,143)	15,000	-	15,000	37,143	7,041
Q DLUHC Staff, Building and Infrastructure Costs	–	–	–	12,776	-	12,776	12,776	(1,667)	14,443	12,776	–	(10,567)
R Non-Domestic Rates Outturn Adjustment	–	–	–	-	-	–	–	135,000	-	135,000	135,000	–
S Local Government & Public Services (ALB) (Net) (1)	–	–	–	3,832	-	3,832	3,832	5,091	-	5,091	1,259	4,462
T Housing & Planning(ALB) (Net)1	–	–	–	357,852	(618,015)	(260,163)	(260,163)	1,729,163	-	1,729,163	1,989,326	(901,232)
U Business Rates Retention	–	–	–	17,284,892	(6,184,032)	11,100,860	11,100,860	11,329,327	-	11,329,327	228,467	14,168,541
Other Grants and Payments	–	–	–	–	–	–	–	–	-	–	–	(5,642,633)
Total spending in RAME	–	–	–	17,630,998	(6,829,633)	10,801,365	10,801,365	13,723,410	-	13,723,410	2,922,045	7,666,661
Total resource	233,056	–	233,056	33,334,810	(7,130,794)	26,204,016	26,437,072	29,962,024	-	29,962,024	3,524,952	31,693,275
TOTAL	233,056	–	233,056	33,334,810	(7,130,794)	26,204,016	26,437,072	29,962,024	-	29,962,024	3,524,952	31,693,275

(1) Expenditure and income on these estimate rows are presented net in the Gross column per HMT Treasury guidance. All other estimate rows present expenditure and income separately: expenditure in the Gross column and income in the Income column.

(2) Parliament does not vote on how budget within a control total is distributed across the estimate row sub-headings. As a result and per the HMT Supply Estimates Manual, the department has discretion to move budget between estimate rows via ‘virements’.

SoPS 1.2 Analysis of capital outturn by Estimate line

								£’000
							2022-23	2021-22
			Outturn			Estimates		Outturn
Type of spend (Capital)	Gross	Income	Net Total	Net Total	Virements(2)	Total inc. virements	Outturn vs Estimate saving/ excess	Net
Spending in Departmental Expenditure Limit (CDEL) – DLUHC Housing and Communities Voted expenditure
A Local Government & Public Services	110,253	(36,070)	74,183	109,935	(12)	109,923	35,740	85,670
B Housing and Planning	1,922,285	(596,043)	1,326,242	1,546,056	–	1,546,056	219,814	940,752
C Local Growth and Devolution	1,819,815	(247,556)	1,572,259	1,621,688		1,621,688	49,429	1,256,681
D Elections, Union and Constitution	6,610	–	6,610	9,800	–	9,800	3,190	–
E Supporting Families	140	–	140	340	–	340	200	(69)
F Research, Data & Trading Funds	8,210	(6,980)	1,230	10,535	–	10,535	9,305	6,344
G DLUHC Staff, Building and Infrastructure Costs	74,854	(54,693)	20,161	23,084	–	23,084	2,923	18,182
H Local Government and Public Services (ALB)(Net)(1)	869	–	869	857	12	869	–	189
I Housing and Planning (ALB)(Net)(1)	3,816,071	–	3,816,071	3,832,798	–	3,832,798	16,727	3,834,622
Total spending in CDEL – DHLUC Housing and Communities	7,759,107	(941,342)	6,817,765	7,155,093	**– **	7,155,093	337,328	6,142,371
Total CDEL & CAME	7,759,107	(941,342)	6,817,765	7,155,093	–	7,155,093	337,328	6,142,371

(1) Expenditure and income on these estimate rows are presented net in the Gross column per HMT Treasury guidance. All other estimate rows present expenditure and income separately: expenditure in the Gross column and income in the Income column.

(2) Parliament does not vote on how budget within a control total is distributed across the estimate row sub-headings. As a result, and per the HMT Supply Estimates Manual, the department has discretion to move budget between estimate rows via ‘virements’.

The total Estimate columns include virements. Virements are the reallocation of provision in the Estimates that do not require parliamentary authority (because Parliament does not vote to that level of detail and delegates to HM Treasury). Further information on virements is provided in the Supply Estimates Manual, available on gov.uk.^{[footnote 27]}

The outturn vs estimate column is based on the total including virements. The estimate total before virements have been made is included so that users can tie the estimate back to the Estimates laid before Parliament.

SoPS 2 Reconciliation of outturn to net operating expenditure

			£’000
	SoPS Note	2022-23	2021-22
Total Resource Outturn in Statement of Parliamentary Supply:	1.1	26,437,072	31,693,275
Add: Capital grants		4,616,317	3,730,446
Add: Capital budget adjustments(1)		(152)	10,708
Add: Asset transfers		–	–
Less: Income outside the ambit of the estimate payable to the Consolidated Fund	4.1	(186,712)	(48,155)
Less: Prior Period Adjustment		–	–
Net Operating Expenditure in Consolidated Statement of Comprehensive Net Expenditure		30,866,525	35,386,274

(1) The capital budget adjustment include profit on disposal of certain financial assets that are recoded in net operating expenditure in the financial statements but are not recorded in SOPS budgets, research and development costs and the capital element of the Grenfell Tower provision which are recorded in net operating expenditure in the financial statements but are recorded in the capital budget rather than the budget in SOPS.

As noted in the introduction to the SoPS above, outturn and the Estimates are compiled against the budgeting framework, which is similar to, but different from, IFRS. Therefore, this reconciliation bridges the resource outturn to net operating expenditure, linking the SoPS to the Financial Statements. Reconciling items must be explained, if not already explained elsewhere, with reference to where and why budgeting rules diverge from IFRS. For example, capital grants are budgeted for as CDEL but accounted for as spend on the face of the SOCNE, and therefore function as a reconciling item between Resource and Net Operating Expenditure. £3 billion of capital grants were issued to local government for the purposes of funding capital spend by local authorities.

SoPS 3. Reconciliation of net resource outturn to net cash requirement

As noted in the introduction to the SoPS above, outturn and the Estimates are compiled against the budgeting framework, not on a cash basis. Therefore, this reconciliation bridges the resource and capital outturn to the net cash requirement

				£’000
				2022-23
	SoPS Note	Outturn	Estimate	Outturn vs Estimate, saving/(excess)
Total Resource Outturn	1.1	26,437,072	29,962,024	3,524,952
Total Capital Outturn	1.2	6,817,765	7,155,093	337,328
Adjustments to remove non-cash items:
Depreciation and amortisation		(26,449)	(147,661)	(121,212)
Local Share (local authorities)
New provisions and adjustments to previous provisions		13,299	(415,921)	(429,220)
Other non-cash items		(9,455,610)	(11,829,960)	(2,374,350)
Adjustments for ALBs:
Remove voted resource and capital		(3,508,313)	(5,837,862)	(2,329,549)
Add cash grant-in-aid		1,589,889	1,979,971	390,082
Adjustments to reflect movements in working balances:
Increase/(decrease) in inventories		115,506	–	(115,506)
Increase/(decrease) in receivables		(115,101)	–	115,101
(Increase)/decrease in payables		132,832	6,917,568	6,936,244
Use of provisions and pension fund adjustments		14,962	12,122	(2,840)
Other Adjustments		18,090	–	(18,090)
Removal of non-voted budget items:
Consolidated Fund Standing Services		82	(7,700)	(7,782)
Returning Officers’ Expenses England and Wales		–	–	–
Net cash requirement		22,034,024	27,787,674	5,905,158

SoPS 4. Amounts of income to the Consolidated Fund

SoPS 4.1 Analysis of income payable to the Consolidated Fund

In addition to income retained by the department, the following is payable to the Consolidated Fund (cash receipts being shown in italics).

				£’000
		Outturn 2022-23		Outturn 2021-22
	Accruals	Cash basis	Accruals	Cash basis
Income outside the ambit of the Estimate(1)	186,712	186,712	48,155	48,155
Other amounts collectable on behalf of the Consolidated Fund(2)	2,210,130	2,323,636	1,901,730	1,901,730
Total amount payable to the Consolidated Fund	2,396,842	2,510,348	1,949,885	1,949,885

(1) Monies received from local authorities for excess receipts generated from the disposal of housing assets (i.e. assets held under part 2 of the Housing Act 1985 accounted for in local authorities Housing Revenue Accounts). Referred to as CFER income (consolidated fund extra receipt) in Note 5 to the Financial Statements.

(2) Receipts in relation to the Help to Buy scheme as those home owners who are part of the scheme sell their homes and repay their equity loan Guarantee fees received from the ENABLE Build scheme.

SoPS 4.2 Consolidated Fund Income

Consolidated Fund income shown in SoPS Note 4.1 above does not include any amounts collected by the department where it was acting as agent of the Consolidated Fund rather than as principal. Full details of income collected as agent for the Consolidated Fund are in the department’s Trust Statement published as part of the Annual Report and Accounts from page 160.

Parliamentary Accountability Disclosures

Financial Overview

Significant variances against Estimate

At the start of each year we estimate our costs for each budget type and we monitor these throughout the year. The size of our budget, along with economic, environmental and social changes means there will inevitably be some variance from our Estimates. The Statement of Outturn against Parliamentary Supply on page 87 shows our 2022-23 outturn figures against Estimates.

Where the comparison of outturn against Estimate has shown an overspend or an underspend of more than £2 million and 10% this is explained below:

	Estimate Subhead	Outturn £m	Budget £m	Variance to Estimate %	Explanation
	Resource Spending in Departmental Expenditure Limit (RDEL) – DLUHC Communities
F	Research, Data & Trading Funds	5	17	-71%	Variance is primarily due to funding received from the EU in relation to European Regional Development Fund.
I	Housing and Planning (ALB) (Net)	(70)	252	-128%	Income from financial transactions was higher than budgeted, reducing the amount of funding required for land and housing programmes. In addition, an investment that had previously been written off has now been received.
J	Elections	(0)	8	-101%	Variance is due to lower by-election costs than expected this year.
	Resource Spending in Annually Managed Expenditure (RAME)
N	Local Government and public services	(36)	390	-109%	Variance mainly relates to the Audit Commission Pension Scheme. The Supplementary Estimate budget was set based on a reasonable worst-case scenario, reflecting volatility in the scheme’s liability driven instruments during the year. This exposure has since diminished. The variance was also due to a change in the provision for the Grenfell Tower.
O	Housing and Planning	2	122	-98%	These budgets are held to manage expected losses on the Department’s guarantee programmes. Deterioration in credit quality was less than expected.
P	Local Growth and Devolution	(22)	15	-248%	Variance relates to a re-evaluation of the European Regional Development Fund balance sheet position, as well as Greenwich Peninsula land asset values at year end.
Q	DLUHC Staff, building and infrastructure costs	13	(2)	-866%	Variance is primarily due to a change in asset values following investment property revaluation.
R	Non-Domestic Rates Outturn Adjustment	-	135	-100%	This is a year-end contingency agreed at the Supplementary Estimate to cover any movements in business rate outturn.
T	Housing & Planning(ALB) (Net)	(260)	1,729	115%	Income from financial transactions was higher than budgeted, reducing the amount of funding required for land and housing programmes. In addition, an investment that had previously been written off has now been received.
	Capital Spending in Departmental Expenditure Limit (CDEL) – DLUHC Communities
A	Local Government & Public Services	74	110	-33%	Variance primarily relates to Traveller Sites reflecting a change in the programme delivery plan.
B	Housing and Planning	1,326	1,546	14%	Variance is mainly due to re-baselining of the Housing Infrastructure and Affordable Housing Programme plans, partially offset by additional spend towards the new Local Authority Housing Fund which was introduced to support housing pressures, as well as for building remediation projects.
D	Elections, Union and Constitution	7	10	-33%	Variance is due to changes in the Electoral Integrity Programme timetable, which led to some IT delivery costs moving to the next financial year.
F	Research, Data & Trading Funds	1	11	88%	Variance is principally due to lower demand for analytical services to support the department’s work, partially offset by an increase in write-offs of European Regional Development Fund receipts.
G	DLUHC Staff, building and infrastructure costs	20	23	-13%	Variance is driven by differences in spend in digital support programmes for Homes for Ukraine and Corporate Cyber resilience, as well as development of the Smarter Working programme.

Core Tables – Departmental Expenditure Outturn and Plans

The tables on the following pages show the department’s expenditure outturn for 2022-23 and the four prior years, along with the planned expenditure for the next year.

Table 1a: Past, current and future departmental resource spending

Departmental Resource Spending
	2018-19	2019-20	2021-22	2021-22	2022-23	2023-24	2024-25
	Restated	Restated	Restated
Spending in DEL – DLUHC Communities	Outturn £’000	Outturn £’000	Outturn £’000	Outturn £’000	Outturn £’000	Plan £’000	Plan £’000
Voted expenditure
Of which:
A: Local Government & Public Services	197,895	194,445	146,809	146,809	146,809	158,425	147,159
B: Housing and Planning	1,573,280	1,630,755	1,764,814	1,737,217	1,579,414	1,420,699	952,639
C: Local Growth and Devolution	178,143	215,151	413,796	365,061	520,939	777,039	198,908
D: Elections, Union and Constitution				-	34,692	53,372	51,431
E: Supporting Families	174,369	155,027	159,926	168,278	206,828	235,000	165,000
F: Research, Data and Trading Funds	2,927	12,239	3,875	(25,809)	4,775	5,519	11,926
G: DLUHC Staff, Building and Infrastructure Costs	167,770	210,633	233,356	267,683	285,263	266,283	254,667
Departmental Unallocated Provision				-	-	-	212,690
H: Local Government & Public Services (ALB) (net)	17,756	18,948	17,956	17,925	17,763	17,738	19,159
I: Housing and Planning (ALB)(net)	41,788	72,780	(25,489)	(4,649)	(70,059)	96,754	159,054
Total Voted	2,353,928	2,509,978	2,715,043	2,709,571	3,863,640	3,030,829	2,172,633
Non Voted Expenditure
J: Elections	(462)	289,896	(5,485)	54,929	(82)	7,700	-
Total Non Voted	(462)	289,896	(5,485)	54,929	(82)	7,700	-
Departmental Expenditure Limit (DEL) – DLUHC Housing and Communities	2,353,466	2,799,874	2,709,558	2,764,500	3,863,558	3,038,529	2,172,633
Voted expenditure
Of which:
K: Revenue Support Grant	1,378,997	653,058	1,612,634	1,621,557	1,672,058	1,905,423	-
L: Other grants and payments	3,450,911	7,918,506	19,290,610	19,603,675	10,012,621	12,656,700	13,940,155
M: Business Rate Retention	3,928	212	3,352	36,882	87,470	62,515	-
Total Spending in DEL – DLUHC Local Govt	4,833,836	8,571,776	20,906,596	21,262,114	11,772,149	14,624,638	13,940,155
Total Resource DEL	7,187,302	11,371,650	23,616,154	24,026,614	15,635,707	17,663,167	16,112,788
Spending in Annually Managed Expenditure (AME) Voted expenditure
Of which:
Other grants and payments	-	-	-	(5,642,633)	-	-	-
N: Local Government & Public Services	7,903	53,671	(9,360)	49,077	(36,220)	49,601	(16,073)
O: Housing and Planning	6,166	8,262	3,867	(8,028)	2,423	102,113	-
P: Local Growth and Devolution	5,802	(2,256)	(7,312)	7,041	(22,143)	5,000	-
Q: DLUHC Staff, Building and Infrastructure Costs	1,267	(4,117)	(1,099)	(10,567)	12,776	(168)	(168)
R: Non-Domestic Rates Outturn Adjustment	(10,818)	2,586	9,520	350,000	350,000
S: Local Government & Public Services (ALB)(Net)	2,354	2,550	2,569	4,462	3,832	5,707	(1,716)
T: Housing and Planning (ALB)(Net)	174,887	(234,400)	(64,990)	(901,232)	(260,163)	2,632,237	(28,801)
U: Business Rate Retention	21,199,022	18,367,167	16,694,832	14,168,541	11,100,860	16,730,761	13,179,820
Total Resource AME	21,386,509	18,193,463	16,628,027	7,666,661	10,801,365	19,875,251	13,483,062
Total Resource	28,573,811	29,565,113	40,244,181	31,693,275	26,437,072	37,538,418	29,595,850

Table 1b: Past, current and future departmental capital spending

Departmental Capital Spending
	2018-19	2019-20	2020-21	2021-22	2022-23	2023-24	2024-25
	Restated	Restated	Restated
Spending in DEL – DLUHC Communities	Outturn £’000	Outturn £’000	Outturn £’000	Outturn £’000	Outturn £’000	Plan £’000	Plan £’000
Voted expenditure
Of which:
A: Local Government & Public Services	885,336	14,782	65,666	85,670	74,183	129,744	34,666
B: Housing and Planning	454,754	1,823,678	1,067,484	940,752	1,326,242	2,138,264	1,954,132
C: Local Growth and Devolution	1,190,461	928,834	2,131,731	1,256,681	1,572,259	1,349,631	689,645
D: Elections, Union and Constitution					6,610	18,037	-
E: Supporting Families	697	749	545	(69)	140	810	1,250
F: Research, Data and Trading Funds	3,072	4,509	3,160	6,344	1,230	9,161	9,000
G: DLUHC Staff, Building and Infrastructure Costs	13,923	6,967	7,125	18,182	20,161	35,065	6,737
Departmental Unallocated Provision						555,724	80,486
H: Local Government & Public Services (ALB)(Net)	494	250	125	189	869	500	994
I: Housing and Planning (ALB)(Net)	4,875,032	5,493,446	5,820,532	3,834,622	3,816,071	2,957,012	4,234,197
Total Spending in DEL - DLUHC Communities	7,423,769	8,273,215	9,096,368	6,142,371	6,817,765	7,193,948	7,011,107

Table 2: Administration budgets

Administration budgets
	2018-19	2019-20	2020-21	2021-22	2022-23	2023-24	2024-25
	Outturn £’000	Outturn £’000	Outturn £’000	Outturn £’000	Outturn £’000	Outturn £’000	Outturn £’000
B: Housing and Planning	36,022	–	–		–	–	–
F: DLUHC Staff, Building & Infrastructure Costs	163,196	204,491	221,784	248,897	263,330	263,864	253,843
G: Local Government & Public Services (ALB)(Net)	17,756	18,940	17,954	17,925	17,763	17,738	19,159
H: Housing and Planning (ALB)(Net)	39,485	26,433	31,351	7,268	(48,037)	55,123	57,171
Total Voted	256,459	249,864	271,089	274,090	233,056	336,725	330,173
Total Administration expenditure	256,459	249,864	271,089	274,090	233,056	336,725	330,173

Interpreting the Core Tables

Below, we have provided detail to help explain significant movements on the estimate row lines shown in the core tables above.

The rows in the Estimates called Departmental Unallocated Provision represent small unallocated budgets in both Resource DEL and Capital DEL which exist to help fund programmes in the future should the need arise.

Administration costs are included within the first section below regarding the Resource DEL – Communities budget.

Resource DEL – Communities

• A: Local Government & Public Services – The increase in outturn in 2022-23 mainly relates to the introduction of the Homes for Ukraine programme which was launched in March 2022. Spend is planned to return to trend for 2023-24 and 2024-25.

• B: Housing and Planning – This covers funding for a large number of programmes at different stages in their lifecycles, which naturally have different requirements year-on-year. The biggest driver of reduced outturn in 2022-23 was due to no new legacy payments on the New Homes Bonus. The planned decrease in 2024-25 reflects the Spending Review allocations.

• C: Local Growth and Devolution – Spending has increased between 2021-22 and 2023-24 reflecting new programme funding to support the levelling up agenda. Funding for the UK Shared Prosperity in 2024-25 is not yet reflected in plans.

• D: Elections, Union and Constitution – This row records the Machinery of Government transfer of functions from the Cabinet Office in 2021-22.

• E: Supporting Families – Payments on this programme are demand-led, with payment made in accordance with the programme results achieved by local authorities. The budget for 2023-24 and 2023-24 has been allocated to match expected delivery.

• F: Research Data and Trading Funds – Outturn in 2022-23 is consistent with most prior years. The difference between 2020-21 and 2021-22 relates to £45m income received after closing the 2007-13 European Regional Development Fund (ERDF) Programme.

• G: DLUHC Staff, Building and Infrastructure Costs – The increase in our resource administration supported the employment of additional resources to deliver expanded programmes. Spend is expected to decrease in 2023-24 and 2024-25 in line with plans agreed through the 2021 Spending Round.

• H: Local Government and Public Services (ALB) (Net) – The row records resource costs of the Valuation Tribunal Service (VTS) and the Commission for Local Administration in England (CLAE), which have remained consistent over time.

• I: Housing and Planning (ALB) (net) – The increase in expenditure was driven by new programmes and work undertaken to build the pipeline for projects in future years. Expenditure is planned to steadily increase for the remainder of the current Spending Review period.

• J: Elections – This is non-voted funding required to run elections, which naturally varies from year to year depending on the number and scale of elections held. This year fewer elections/by-elections were held than had been budgeted for. Funding for 2024-25 will be established at the Main Estimate.

• Departmental Unallocated Provision – The budget in 2024-25 will be allocated to specific programmes at the Main Estimate.

Resource DEL – Local Government

• K: Revenue Support Grant – Part of the department’s remit is to manage and provide funding to local government on behalf of central government. Revenue Support Grant forms part of this funding and can be spent by local authorities on any service. The 2022-23 value is consistent with recent years. There is an increase in 2023-24 to reflect inflationary increases and the rolling in of other grants. There is currently no comparable value or plans for 2024-25.

• L: Other Grants and Payments – This section is lower than in recent years due to a significant reduction in funding through LG DEL for COVID-19 measures.

• M: Business Rates Retention – The row provides budget for the safety net payments to local authorities whose income from business rates is below a baseline level. For 2022-23 there was a higher take up of on account safety net payments. Claims from two London authorities (Westminster and the GLA) accounted for most of the increase. The take up for on account payments for 2023-24 are lower (the GLA has not requested an on account payment). From 2023-24 onwards it also includes funding of £12.5 million for the City of London Offset.

• Other Grants and Payments: To help local authorities manage the ongoing financial impact of the pandemic, in 2021- 22 the on account additional business rate relief grant payments to them were again deliberately inflated as they had been in 2020-21 to help with temporary shortfalls resulting from the announcement of additional reliefs in year. A total of £7.5 billion was paid to local authorities. This led to significant adjustments at year end 2022-23 with the return of £3.6 billion from local authorities.

• N: Local Government & Public Services – The row records the pension costs of the Audit Commission and accounting provisions relating to the London Settlement, Coalfields and Grenfell Tower. Variance in 2022-23 represents a change in the provision for the Grenfell Tower.

• O: Housing and Planning – These budgets are held to cover potential losses on the Departments housing guarantee programmes. Deterioration in credit quality was less than expected. The budget for 2024-25 will be established at the Main Estimate.

• P: Local Growth and Devolution – Variance in the 2022-23 Outturn is due to the annual revaluation of the Greenwich Peninsula land asset and for write offs and exchange rate losses that may be incurred on the European Regional Development Fund (ERDF) programmes. Any funding required for 2024-25 will be established at the Main Estimate.

• Q: DLUHC Staff, Building and Infrastructure Costs – The row provides budget for the creation and release of the core department’s provisions. Year-on-year variances are due to annual revaluation of the Department’s estate. Note 15 provides more detail for 2022-23.

• R: Non-Domestic Rates Outturn Adjustments – The row usually includes year end contingency against audit changes.

• S: Local Government and Public Services (ALB) (Net) – The row usually includes year end contingency against audit changes.

• T: Housing and Planning (ALB) (Net) – The row records revaluations of housing market related assets owned by Homes England which change the valuation of the Help to Buy portfolio. The budget for 2024-25 will be set at the Main Estim

• U: Business Rates Retention – Since 2013-14, local authorities have retained at least 50% of the business rates they collect, which forms a significant portion of their income. Retained business rates are recorded as a non-cash expenditure item in the department’s accounts and the amount forecast to be retained by local authorities in 2022-23 is £11.8 billion.

Capital DEL – Communities

• A: Local Government & Public Services – Outturn in 2022-23 is consistent with previous years, excluding 2018-19 which included the final year of the London Settlement scheme. Budgets are set to increase next year reflecting additional funding for Homelessness and Rough Sleeping programmes.

• B: Housing and Planning – This covers funding for a large number of programmes at different stages in their lifecycles, that naturally have different requirements year-on-year. The increase in outturn in 2022-23 was primarily driven by additional spending on Building Remediation programmes and on the new Local Authority Housing Fund.

• C: Local Growth and Devolution – Increase in outturn in 2022-23 is primarily due to new programme funding to support the levelling up agenda, including Devolution Deals, Towns Fund and Levelling Up Fund. Funding for 2024-25 will be set for all programmes at the Main and Supplementary Estimates.

• D: Elections, Union and Constitution – This row records the Machinery of Government transfer of functions from the Cabinet Office in 2021-22.

• E: Supporting Families – Payments on this programme are demand-led, with payment made in accordance with the programme results achieved by local authorities. Expenditure is planned to increase over the coming years.

• F: Research, Data and Trading Funds – The row records other capital expenditure on research and development.

• G: DLUHC Staff, Building and Infrastructure Costs – The row records the core department’s expenditure on the purchase of non-current assets, mostly relating to IT system improvements, as well as costs associated with delivering the Beyond Whitehall agenda and the Places for Growth programme. Funding for digital programmes in 2024-25 will be set at the Main Estimate.

• H: Local Government and Public Services (ALB)(Net) – The row records capital expenditure on the purchase of noncurrent assets by two ALBs: the Valuation Tribunal Service (VTS) and the Commission for Local Administration in England (CLAE).

• I: Housing and Planning (ALB)(Net) – This row records funding for a large number of programmes at different stages in their lifecycles, that naturally have different requirements year-on-year. Budgets for 2023-24 and 2024-25 have been set in line with latest delivery plans.

• Departmental Unallocated Provision – The budget in 2023-24 relates to Capital Financial Transactions associated with various housing programmes. Budget will be allocated to specific programmes during the year.

Regularity of Expenditure (subject to audit)

Losses, special payments and gifts

Managing Public Money and the FReM require the department to produce a statement showing losses and special payments by value and by type. Where cases individually exceed £300,000, details of those cases must be disclosed.

				2022-23				2021-22
		Core Department and Agency		Departmental Group		Core Department and Agency		Departmental Group
	Cases	£’000	Cases	£’000	Cases	£’000	Cases	£’000
Losses (general)	24	12	95	46	20	10	102	52
Exchange rate losses	–	–	–	–	3	8,850	3	8,850
Claims abandoned	5	466	29	149,371	–	–	25	17,573
Fruitless payments	–	–	2	653	1	103	2	1,217
Constructive losses	–	–	–	–	–	–	–	–

				2022-23				2021-22
		Core Department and Agency		Departmental Group		Core Department and Agency		Departmental Group
	Cases	£’000	Cases	£’000	Cases	£’000	Cases	£’000
Special Payments	74	1,837	75	2,507	45	1,072	45	1,072

Losses

Cases over £300,000	£’000
Regional Growth Fund write-off: Earthly Energy Ltd	459
Homes England: Loans written off or impaired and fruitless payments	148,727

Under International Financial Reporting Standard 9: Financial Instruments (IFRS 9), financial asset investments are either classified as a basic lending arrangement at Amortised Cost or at Fair Value. For assets which are measured at amortised cost, a write-off amount is recognised in the financial statements when it is considered that there is no realistic prospect of full recovery. There are also a number of loan investments which are managed operationally in line with the loan management processes however from an accounting point of view are measured at Fair Value through Profit or Loss (FVTPL). Where it has been assessed that there is no realistic prospect of full recovery for such loan investments, these have also been disclosed in this note. This is aligned with the FReM requirement to disclose losses in this note for the attention of Parliament at the earliest point at which a loss is expected.

For assets measured at Amortised Cost, the effect of discounting future cash flows (to reflect the present value of the anticipated recovery) is considered in order to determine the required write-off allowance for accounting purposes. The losses recognised here include an element of this discounting effect, which will subsequently be unwound in future years as interest income on the impaired balance.

During 2022-23 there were six cases of loan losses recognised where the amount written-off or impaired for accounting purposes was in excess of £300,000, totalling £148.3 million. A fruitless payment of £400,000 was made. Homes England agreed to pay £400,000 to a third-party service provider in line with contractual mechanisms following delays to implementation of the services under the contract. More detailed information on these losses can be found in Homes England’s Annual Report and Accounts

Special Payments

Cases over £300,000	£’000
Personal injury claim	326
Regulator of Social Housing: Housing association payments	670

There was one personal injury claim over £300,000.

The Regulator of Social Housing made special payments of £670,000 to support the financial position of a housing association.

A payment, approved by HM Treasury, contributing to the Grenfell Tower Alternative Dispute Resolution. The total settlement, of which the department’s contribution was a part, was in total around £150 million. The settlement is in respect of a civil damages claim by survivors of the Grenfell Tower fire and bereaved family members. The contribution made by the department to this total is not disclosed in these accounts for confidentiality reasons, following legal advice.

Gifts

Gifts, as defined by Managing Public Money, must also be disclosed and detailed where the value is greater than £300,000. Neither the department, nor its ALBs made any reportable gifts in 2022-23 (2021-22: nil).

Fees and charges (subject to audit)

The following information provides an analysis of the services for which a fee is charged.

						£’000
			2022-23			2021-22
Objectives	Objectives	Income	Surplus/ (Deficit)	Full Cost	Income	Surplus/ (Deficit)
DLUHC – Energy Performance Certificate Fees	(1,661)	2,969	1,308	(2,410)	3,143	733
Planning Inspectorate – Local Plans	(7,291)	3,395	(3,896)	(9,518)	3,549	(5,969)
Planning Inspectorate – National Infrastructure	(12,443)	6,324	(6,119)	(11,426)	5,304	(6,122)
Planning Inspectorate – Other Major Specialist Casework	(4,242)	1,508	(2,734)	(3,986)	1,556	(2,430)
THO – Membership of Housing Ombudsman scheme	(18,089)	18,089	–	(10,376)	10,376	–
RSH – The Regulator of Social Housing	(12,385)	12,385	–	(12,472)	12,472	–
Total	(56,111)	44,670	(11,441)	(50,188)	36,400	(13,788)

Ministerial Direction

The Annual Governance Statement explains the ministerial directions that occurred in the year. Further information is available on page 54.

Contingent liabilities not required to be disclosed under IAS 37 but included for parliamentary reporting and accountability purposes (subject to audit)

In addition to contingent liabilities reported within the meaning of IAS 37, the department also reports liabilities for which the likelihood of a transfer of economic benefit in settlement is too remote to meet the definition of contingent liability.

Quantifiable

The department has entered into quantifiable contingent liabilities by offering guarantees.

• The department operates two guarantee schemes for the affordable housing sector (AHGS). The AHGS 2013 closed to applicants in March 2016 and the programme is now in the portfolio management and monitoring phase, meaning there will be no new applicants or approvals. Therefore, there will be no further drawing against this scheme, with £3.2 billion drawn down. A financial guarantee against the 2013 scheme has been recognised in the Statement of Financial Position with a value of £29.1 million. A second scheme was launched in 2020, guaranteeing debt of no more that £3 billion. At the accounting date £722.5 million of borrowing had been approved, with £648.5 million drawn down. The financial guarantee in the Statement of Financial Position had a value of nil.

• The department has provided a guarantee scheme for the private rented sector (PRS), guaranteeing debt of no more than £3.5 billion. At the accounting date, the department has approved borrowing of circa £1.8 billion of which £1.5 billion has been drawn down and is covered by the guarantee scheme. The guarantees have been valued in accordance with IFRS 9 and have been recognised as a financial guarantee in the Statement of Financial Position with a value of £76.1 million.

• On the 7 May 2019, the department launched the ENABLE Build guarantee scheme, guaranteeing debt of no more than £1 billion. At the accounting date, £346 million has been drawn down and is covered by the guarantee scheme. The guarantees have been valued in accordance with IFRS 9 and have been recognised as a financial guarantee in the Statement of Financial Position with a value of £50,000.

• The guarantee schemes are designed to encourage investment in the housing market by guaranteeing to repay money borrowed in the event a borrower defaults. As at the reporting date there have been no calls on the guarantees.

• In 2019-20, the department provided a letter of comfort to the Queen Elizabeth II Conference Centre to confirm that a loan will be provided if required, in accordance with the Framework Agreement between the department and the trading fund. The department laid a Statutory Instrument on the 8th June 2021 to increase the trading fund’s borrowing limit from £2 million to £12 million. At 31 March 2023, the department had loaned the trading fund £2.6 million.

The department has not entered into any quantifiable contingent liabilities by offering indemnities.

Unquantifiable

The department has entered into the following unquantifiable contingent liabilities by offering guarantees, indemnities or by giving letters of comfort. None of these is a contingent liability within the meaning of IAS 37 since the likelihood of a transfer of economic benefit in settlement is too remote.

• Professional Indemnity Insurance (PII) Scheme – The department provides state backing to an insurer who administers PII policies for qualified professionals to enable them to access the indemnity cover they need to undertake EWS1 assessments. The cost of the scheme, including the expected losses, was designed to be offset through premiums. The liability recognised on the balance sheet is nil. The contingent liability is unlimited because there is no theoretical cap on the size of claims that could be made. However, the risk is limited by the number of buildings, the number of EWS1 assessments, insurance only being issued to qualified professionals and audit of the certificates.

• To strengthen local authorities’ ability to enforce building safety remediation action, the department has indemnified the Joint Inspection Team (JIT) for professional indemnity and for death and personal injury claims resulting from their advice. The local authority retains responsibility for decisions on enforcement. The indemnity is unquantifiable and will continue for the duration of the period over which the JIT operates and 6 years thereafter for professional indemnity, and 125 years for death and personal injury.

• The department provides letters of comfort to ALBs in relation to their pension scheme liabilities. Ebbsfleet Development Corporation is no longer part of the Departmental Group for accounting purposes but the department continues to be responsible for governance arrangements and the letter of comfort continues to be in place.

The department has contingent liabilities associated with the reimbursement to Returning Officers for the cost of holding elections:

• An indemnity to Returning Officers for UK Parliamentary elections. For the purposes of UK Parliamentary elections, Returning Officers and Acting Returning Officers throughout Great Britain are statutorily independent officers. They stand separate from both central and local government. As a result, they can be exposed to a variety of legal risks varying from minor claims for injury at polling stations to significant election petitions challenging the outcome of a poll and associated legal costs. The indemnity is to cover the costs of any claims against them, which are not covered under the existing insurance policies that Returning Officers hold. The indemnity will cover costs arising in relation to UK Parliamentary elections including by-elections, where the date of the poll is on or before the 1 May 2024.

• An indemnity to Police Area Returning Officers and Local Returning Officers for the Police and Crime Commissioner elections held on 6 May 2021. For the purposes of Police and Crime Commissioner elections, Police Area Returning Officers and Local Returning Officers throughout England and Wales are statutorily independent officers. They stand separate from both central and local government. As a result, they can be exposed to a variety of legal risks varying from minor claims for injury at polling stations to significant election petitions challenging the outcome of a poll and associated legal costs.  The indemnity is to cover the costs of any claims against them, which are not covered under any existing insurance policies that Police Area Returning Officers and Local Returning Officers hold. The Department will also certificate the Returning Officers under The Employers’ Liability (Compulsory Insurance) Regulations 1998 in respect of any liability to their employees.  The indemnity and certificate will remain in place to provide cover to Police Area Returning Officers and Local Returning Officers for any by-elections that are held prior to the next scheduled Police and Crime Commissioner elections on 2 May 2024. 

• An indemnity to Petition Officers for any Recall Petition that may be held between the date the indemnity came into force, 8 June 2016, and 6 May 2020. For the purposes of Recall Petitions, Petition Officers throughout Great Britain are statutorily independent officers. They stand separate from both central and local government. As a result, they can be exposed to a variety of legal risks varying from minor claims for injury at signing locations to recall petition complaints, challenging the outcome of a petition and associated legal costs. The Cabinet Office has not provided an indemnity for Petition Officers previously as the Recall Petition legislation came into effect only in 2015. This follows the same process where the Cabinet Office has provided an indemnity to Returning Officers for the UK Parliamentary elections in May 2015, as well as all other recent electoral events. The indemnity is to cover the costs of any claims against Petition Officers, which are not otherwise recoverable under the charges provisions contained in paragraph 3 of Schedule 1 to the Recall of MPs Act 2015.

Reconciliation between contingent liabilities reported in the Supply Estimate and the Annual Report and Accounts (ARA) (not subject to audit)

Quantifiable contingent liabilities

Description of contingent liability	Supply Estimate (£’000)	Amount disclosed in ARA (£’000)	Variance (Estimate – Amount disclosed in ARA), £’000)
Government Legal Department	118	237	(119)
Right to Buy	250 to 750	250 to 750	–
Planning inspectorate: litigation	64	96	(32)
Planning Inspectorate Ex-gratia	243	185	58
ERDF corrections	2,500	2,500	–
AHGS 2013 drawn down	3,200,000	3,200,000	–
AHGS 2020 scheme size	3,000,000	3,000,000	–
AHGS 2020 approved	448,500	723	447,778
AHGS 2020 drawn down	398,500	649	397,852
PRS scheme size	3,500,000	3,500,000	–
PRS approved borrowing	1,800,000	1,800,000	–
PRS drawn down	1,500,000	1,500,000	–
ENABLE Build scheme size	1,000,000	1,000,000	–
ENABLE Build drawn down	176,000	346,000	(170,000)
QEII Conference Centre	4,579	2,600	1,979

The reason for the variances between the Supply Estimates and the Annual Report and Accounts is that the Supply Estimates are prepared before year end using the latest available numbers whereas the Annual Report and Accounts shows the figures at 31 March 2023. The basis of calculation is the same.

Unquantifiable contingent liabilities

Description of contingent liability	Included in the Supply Estimate (Yes/No)	Disclosed in the ARA? (Yes/No)	Explanation of difference
European legislation	Yes	Yes	NA
ERDF 2014-20	Yes	Yes	NA
Grenfell Tower	Yes	Yes	NA
Homes England: Sunderland City Council	Yes	No	Reduction in assessment of probability and value.
Homes England: West Sussex Pension Scheme	Yes	Yes	NA
Homes England: miscellaneous claims	Yes	Yes	NA
Professional indemnity insurance	Yes	Yes	NA
Joint inspection team	Yes	Yes	NA
ALB letters of comfort	Yes	Yes	NA
Elections	Yes	Yes	NA

Government Functional Standards

UK Government Functional Standards set expectations for the management of functional work and the functional model across government. The department works towards ongoing compliance with these standards, where applicable.

Sarah Healey CB CVO

Accounting Officer

Department for Levelling Up, Housing and Communities

14 July 2023

THE CERTIFICATE AND REPORT OF THE COMPTROLLER AND AUDITOR GENERAL TO THE HOUSE OF COMMONS

Opinion on financial statements

I certify that I have audited the financial statements of the Department for Levelling Up, Housing and Communities and of its Departmental Group for the year ended 31 March 2023 under the Government Resources and Accounts Act 2000. The Department comprises the core Department and its executive agency. The Departmental Group consists of the Department and the bodies designated for inclusion under the Government Resources and Accounts Act 2000 (Estimates and Accounts) Order 2022. The financial statements comprise: the Department’s and the Departmental Group’s:

• Statement of Financial Position as at 31 March 2023;

• Statement of Comprehensive Net Expenditure, Statement of Cash Flows and Statement of Changes in Taxpayers’ Equity for the year then ended; and

• the related notes including the significant accounting policies.

The financial reporting framework that has been applied in the preparation of the Group financial statements is applicable law and UK adopted international accounting standards.

In my opinion, the financial statements:

• give a true and fair view of the state of the Department and the Departmental Group’s affairs as at 31 March 2023 and its net operating expenditure for the year then ended; and

• have been properly prepared in accordance with the Government Resources and Accounts Act 2000 and HM Treasury directions issued thereunder.

Opinion on regularity

In my opinion, in all material respects:

• the Statement of Outturn against Parliamentary Supply properly presents the outturn against voted Parliamentary control totals for the year ended 31 March 2023 and shows that those totals have not been exceeded; and

• the income and expenditure recorded in the financial statements have been applied to the purposes intended by Parliament and the financial transactions recorded in the financial statements conform to the authorities which govern them.

Basis for opinions

I conducted my audit in accordance with International Standards on Auditing (UK) (ISAs UK), applicable law and Practice Note 10 Audit of Financial Statements and Regularity of Public Sector Bodies in the United Kingdom (2022). My responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of my certificate.

Those standards require me and my staff to comply with the Financial Reporting Council’s Revised Ethical Standard 2019. I am independent of the Department and its Group in accordance with the ethical requirements that are relevant to my audit of the financial statements in the UK. My staff and I have fulfilled our other ethical responsibilities in accordance with these requirements.

I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.

The framework of authorities described in the table below has been considered in the context of my opinion on regularity.

Framework of authorities
Authorising legislation	Government Resources and Accounts Act 2000
Parliamentary authorities	Supply and Appropriations Act
HM Treasury and related authorities	Managing Public Money
Regulations issued under governing legislation	Primary and secondary legislation which specifies the circumstances in which a Minister of the Crown may provide financial assistance to a local authority, person or charitable institution.

The key audit matters were discussed with the Audit and Risk Committee.

Conclusions relating to going concern

In auditing the financial statements, I have concluded that the Department and its Group’s use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work I have performed, I have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Department or its Group’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

My responsibilities and the responsibilities of the Accounting Officer with respect to going concern are described in the relevant sections of this certificate.

The going concern basis of accounting for the Department and its Group is adopted in consideration of the requirements set out in HM Treasury’s Government Financial Reporting Manual, which requires entities to adopt the going concern basis of accounting in the preparation of the financial statements where it is anticipated that the services which they provide will continue into the future.

Overview of my audit approach

Key audit matters

Key audit matters are those matters that, in my professional judgment, were of most significance in the audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by the auditor, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team.

These matters were addressed in the context of the audit of the financial statements as a whole, and in forming my opinion thereon. I do not provide a separate opinion on these matters.

This is not a complete list of all risks identified through the course of my audit but only those areas that had the greatest effect on my overall audit strategy, allocation of resources and direction of effort. I have not, for example, included information relating to the work I have performed around presumed risk of management override of controls, or the risk relating to the complete and accurate disclosure of financial commitments, areas where my work has not identified any matters to report.

The key audit matters were discussed with the Audit and Risk Committee.

Key audit matter 1 – Help to Buy Equity Loans Portfolio

Description of risk

Homes England provides equity loans to homeowners buying new build properties up to a value of £600k through its Help to Buy schemes. As at 31 March 2023, there were over 250,000 ‘live’ Help to Buy accounts. The Help to Buy equity loans portfolio dominates the Departmental Group’s statement of financial position, valued at £18.9 billion at 31 March 2023.

Valuation of the portfolio is undertaken with reference to market conditions prevailing at the reporting date. The valuation is highly sensitive to changes in the underlying methodology and assumptions, in particular market prices, and is subject to long-term estimation uncertainty arising from economic circumstances and market conditions. There is a risk that the data, method and assumptions used are inappropriate and that estimation uncertainty disclosures are not sufficient or accurate.

There are known quality issues over data feeding into the estimate, and risks associated with reliance on third parties as key delivery partners.

The valuation of the Help to Buy equity loan portfolio is calculated over a number of models, with no automated interfaces between these. There is increased risk of error resulting from the need to manually maintain and update the models individually when new input data is received or assumptions change.

How the scope of my audit responded to the risk

I undertook procedures to evaluate the reasonableness of management’s estimate of the Help to Buy valuation. This included: Assessing the design and implementation of the following controls operated by management:- * processes to verify the accuracy of underlying data * quality review procedures over the Help to Buy models * controls implemented to manage the three-way split of the Help to Buy models for reporting purposes * governance arrangements for the valuation and models. Performing the following substantive testing:- * assessing the appropriateness of the Help to Buy valuation methodology, drawing upon NAO specialist analytical and statistical expertise * calculating my own estimate of the valuation using Home England’s assumptions and portfolio data, drawing upon NAO specialist modelling expertise to do so * assessing whether the valuation assumptions selected by management were reasonable and in line with my understanding of the nature of the scheme and wider market expectations * evaluating whether assumptions have been consistently applied across the models and appropriately disclosed in the financial statements * challenging whether indices used in the valuation model are appropriate including consideration of alternatives * evaluating estimation uncertainty by using NAO modelling expertise to perform sensitivity analysis and considering the impact of alternative data inputs on the model output * testing the accuracy of the data supporting the valuation, by agreeing a sample of data within the Help to Buy models to underlying equity loan contracts and other sales documentation, as well as a review of redemption documentation * reviewing the sufficiency and accuracy of the disclosures in the financial statements regarding estimation uncertainty. Key observations The procedures I performed in response to this risk were satisfactory. I noted no material issues arising from my work.

 Key audit matter 2 – Expected Credit Loss Allowance

Description of risk

Homes England is required by accounting standards (IFRS 9 Financial Instruments) to consider how current and future economic conditions impact on the level of expected credit loss for certain financial assets, including loans held at amortised cost and trade receivables. This leads to recognition of an expected credit loss provision which, at 31 March 2023 was £69 million on a portfolio valued at £1,481 million.

Although the balance of the provision is small and has not moved significantly, the estimate requires a high degree of judgement across a range of factors, which must take into account both forward-looking information (including forecasts of future economic conditions), and information on past events and current conditions. Management is required to determine the level of credit risk associated with each asset, whether credit risk on each asset has increased significantly since initial recognition, the probability that borrowers will default and estimate amounts recoverable via securities held against loans in the event of a default. As such, the inherent uncertainty is significant, particularly given the highly material value of the underlying portfolio, and leads us to recognise a significant risk over the valuation of this accounting estimate.

The risk is that the method and assumptions used are not appropriate or in accordance with the financial reporting framework. There is also a risk that the estimation uncertainty disclosures are not sufficient or accurate.

How the scope of my audit responded to the risk

I undertook procedures to evaluate the reasonableness of management’s estimate of Expected Credit Losses. This included: Assessing the design and implementation of the following controls operated by management:- * processes to challenge the development of specific assumptions applied in making the estimate * quality review procedures over the expected credit loss model Performing the following substantive testing:- * agreeing significant data inputs to underlying information * considering the reasonableness and appropriateness of key assumptions applied in forming the expected credit loss provision, including the use of NAO specialist expertise to challenge the macro-economic forecasting feeding into the estimate * challenging management judgements on the probability of default and credit risk ratings including whether there has been a significant increase in credit risk * reviewing the model to confirm the logical integrity * reviewing the method used to produce the estimate to confirm compliance with the financial reporting framework * reviewing the accuracy and sufficiency of disclosures made in the financial statements regarding uncertainty in the estimate. Key observations The procedures I performed in response to this risk were satisfactory. I noted no material issues arising from my work.

Key audit matter 3 – Level 3 Fair Value Assets

Description of risk

Homes England holds a portfolio of financial assets which are valued using unobservable inputs, primarily through predicting returns receivable from development and infrastructure projects, discounted to reflect the time value of money. Within the IFRS 13 Fair Value hierarchy, these are classified as ‘Level 3’. Level 3 fair value assets totalled £578 million at 31 March 2023. Asset valuations are based on risk adjusted future cashflows. Management are required to make a number of judgements in arriving at these cashflows, creating inherent estimation uncertainty. Management need to assess the future financial performance and viability of investees, and the underlying projects. This involves taking into account current evidence of performance and developing assumptions around market conditions.

There is a risk that the data, method and assumptions used in the calculation of fair value are inappropriate and not in accordance with the financial reporting framework. There is also the risk that estimation uncertainty disclosures are not sufficient or accurate. In addition there is a risk that assets are recognised inappropriately or classified incorrectly in the IFRS 13 hierarchy.

How the scope of my audit responded to the risk

I undertook procedures to evaluate the reasonableness of management’s Valuation of Level 3 Fair Value Assets. This included: Assessing the design and implementation of the following controls operated by management:- * processes to challenge the cash flow forecasts and related assumptions applied in making the estimate * quality review procedures over the valuation estimate * Performing the following substantive testing:- * agreeing a sample of individual level 3 fair value assets to underlying supporting documentation, considering specifically the valuation method, expected timing and amount of future cashflows * challenging key assumptions impacting the valuation including management judgements over future expected cash flows, in particular where investees are in financial difficulty and the cash flows may need to be risk adjusted to better reflect predicted returns * using experts to verify future cash flows that are based on land or property valuations * considering whether level 3 assets were recognised, presented and classified appropriately in accordance with the financial reporting framework * reviewing the model to confirm the logical integrity and data inputs * reviewing the sufficiency and accuracy of disclosures around estimation uncertainty in the valuation. Key observations The procedures I performed in response to this risk were satisfactory. I noted no material issues arising from my work.

Key audit matter 4 – Grant Expenditure

Description of risk

The majority of the Department’s annual expenditure takes the form of grants paid to local authorities in England. There are also grant programmes which extend to local authorities within the devolved nations and grants paid to charities and other community organisations. In 2022-23 this amounted to over £24 billion of expenditure in total.

Due to the magnitude of this expenditure there are risks of material misstatement if:  

• the recognition policy for grant expenditure does not comply with the HM Treasury Government Financial Reporting Manual;

• grant expenditure is incorrectly classified, recorded inaccurately or did not occur; for example if grants are recognised as expenditure that do not reflect the substance of the underlying grant agreements with local authorities or other recipient;

• grant expenditure has been recognised in the incorrect period;

• grant expenditure is incomplete.

There are also risks of material irregularity if:

• grants are recognised which the Department does not have legal authority to award under relevant legislation;

• a grant is not used by the local authority or other recipient in accordance with the terms and conditions set out in the grant agreement.

• the risk of incomplete grant expenditure were to materialise, such that recording these commitments would result in a breach of parliamentary control totals.

How the scope of my audit responded to the risk

I undertook procedures to address the risk of misstatement and irregularity in grant expenditure. This included: Assessing the design and implementation of the following controls operated by management:- * processes to recognise and pay genuine grants in accordance with the underlying agreements and legislation; * processes to monitor grant usage to assess whether funding paid by the Department had been spent in accordance with the terms and conditions set out in the grant agreement. Performing the following substantive testing:- * reviewing the accounting policy for grant expenditure to assess whether it was compliant with the Financial Reporting Manual * testing a sample of grant expenditure to confirm it had been recognised in the financial statements and paid to the recipient in accordance with the underlying grant agreement, and that the grant has been awarded appropriately under the relevant legislation * testing a sample of grant payments close to the year-end and in the periods after the year end to assess if grant expenditure had been recognised in the correct period and was complete * assessing whether the Department had committed to any grant programmes before the year end that had not been recognised in the financial statements but would meet the recognition criteria for grant expenditure as set out in the Department’s accounting policies. This included consideration of spending plans announced by the Department late in the financial year * testing a sample of grants to assess whether the terms and conditions had been complied with by the receiving local authority or other recipient. Key observations The procedures I performed in response to this risk were satisfactory. I noted no material issues arising from my work.

Application of materiality

Materiality

I applied the concept of materiality in both planning and performing my audit, and in evaluating the effect of misstatements on my audit and on the financial statements. This approach recognises that financial statements are rarely absolutely correct, and that an audit is designed to provide reasonable, rather than absolute, assurance that the financial statements are free from material misstatement or irregularity. A matter is material if its omission or misstatement would, in the judgement of the auditor, reasonably influence the decisions of users of the financial statements.

Based on my professional judgement, I determined overall materiality for the Department and its group’s financial statements as a whole as follows:

	Departmental group	Department (Parent)
Materiality	£324m	£323m
Basis for determining overall account materiality	1% of gross expenditure of £32,378m (2021/22 1% of £36,565m)	1% of gross expenditure of £32,349m (2021/22 1% of £36,549m)
Rationale for the benchmark applied	The Department is funded directly from the Consolidated Fund and primarily spends money on revenue and capital grants to local authorities and other bodies. The issue of grants is the main direct means financially by which the Department delivers its remit. Gross expenditure is the primary area of stakeholder interest in the parent financial statements. Most activities of the group relate to the parent department and therefore expenditure is also the primary area of interest in the group financial statements. As parent expenditure is greater than that of the group then gross expenditure is capped for the parent when determining materiality to produce a parent materiality that is lower than the group.

Performance Materiality

I set performance materiality at a level lower than materiality to reduce the probability that, in aggregate, uncorrected and undetected misstatements exceed the materiality of the financial statements as a whole. Group performance materiality was set at 75% of Group materiality for the 2022-23 audit (2021-22: 75%). In determining performance materiality, I also considered the uncorrected misstatements identified in the previous period.

Other Materiality Considerations

Apart from matters that are material by value (quantitative materiality), there are certain matters that are material by their very nature and would influence the decisions of users if not corrected. Such an example is any errors reported in the Related Parties note in the financial statements. Assessment of such matters needs to have regard to the nature of the misstatement and the applicable legal and reporting framework, as well as the size of the misstatement.

I applied the same concept of materiality to my audit of regularity. In planning and performing my audit work to support my opinion on regularity and in evaluating the impact of any irregular transactions, I considered both quantitative and qualitative aspects that would reasonably influence the decisions of users of the financial statements.

Error Reporting Threshold

I agreed with the Audit and Risk Committee that I would report to it all uncorrected misstatements identified through my audit in excess of £300k, as well as differences below this threshold that in my view warranted reporting on qualitative grounds. I also report to the Audit and Risk Committee on disclosure matters that I identified when assessing the overall presentation of the financial statements.

Total unadjusted audit differences reported to the Audit and Risk Committee would have decreased net expenditure and assets by £30.5m.

Audit scope

The scope of my Group audit was determined by obtaining an understanding of the Department, its Group and its environment, including Group-wide controls, and assessing the risks of material misstatement at the Group level.

The Departmental Group has total assets of £26.5bn. The group’s only significant component is Homes England which holds the majority of the Group’s assets which are within the Help to Buy portfolio, valued at £18.9bn.

I have audited the financial information of the Core Department, as well as the group consolidation. My audit of the significant component Homes England, which is overseen by the same engagement director, was complete at the time of my completion of the group audit. As group auditor, I have gained assurance from the auditors of the significant and material component and engaged regularly on the group significant risks such as the valuation of Help to Buy assets.

This work on the core Department and Homes England covered 99% of the Group’s expenditure and 99% of the Group’s asset, and together with the procedures performed at group level, gave me the evidence I needed for my opinion on the group financial statements as a whole.

Gross assets of individual components of the DLUHC Group (as at 31 March 2023)

Other Information

The other information comprises the information included in the Annual Report, but does not include the financial statements and my auditor’s certificate and report thereon. The Accounting Officer is responsible for the other information.

My opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in my certificate, I do not express any form of assurance conclusion thereon.

My responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or my knowledge obtained in the audit or otherwise appears to be materially misstated.

If I identify such material inconsistencies or apparent material misstatements, I am required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work I have performed, I conclude that there is a material misstatement of this other information, I am required to report that fact.

I have nothing to report in this regard.

Opinion on other matters

In my opinion the part of the Remuneration and Staff Report to be audited has been properly prepared in accordance with HM Treasury directions made under the Government Resources and Accounts Act 2000.

In my opinion, based on the work undertaken in the course of the audit:

• the parts of the Accountability Report subject to audit have been properly prepared in accordance with HM Treasury directions made under the Government Resources and Accounts Act 2000; and

• the information given in the Performance and Accountability Reports for the financial year for which the financial statements are prepared is consistent with the financial statements and is in accordance with the applicable legal requirements.

Matters on which I report by exception

In the light of the knowledge and understanding of the Department, its Group and its environment obtained in the course of the audit, I have not identified material misstatements in the Performance and Accountability Reports.

I have nothing to report in respect of the following matters which I report to you if, in my opinion:

• Adequate accounting records have not been kept by the Department and its Group or returns adequate for my audit have not been received from branches not visited by my staff; or

• I have not received all of the information and explanations I require for my audit; or

• the financial statements and the parts of the Accountability Report subject to audit are not in agreement with the accounting records and returns; or

• certain disclosures of remuneration specified by HM Treasury’s Government Financial Reporting Manual have not been made or parts of the Remuneration and Staff Report to be audited is not in agreement with the accounting records and returns; or

• the Governance Statement does not reflect compliance with HM Treasury’s guidance.

Responsibilities of the Accounting Officer for the financial statements

As explained more fully in the Statement of Accounting Officer’s Responsibilities, the Accounting Officer is responsible for:

• maintaining proper accounting records;

• providing the C&AG with access to all information of which management is aware that is relevant to the preparation of the financial statements such as records, documentation and other matters;

• providing the C&AG with additional information and explanations needed for his audit;

• providing the C&AG with unrestricted access to persons within the Department and its Group from whom the auditor determines it necessary to obtain audit evidence;

• ensuring such internal controls are in place as deemed necessary to enable the preparation of financial statements to be free from material misstatement, whether due to fraud or error;

• ensuring that the financial statements give a true and fair view and are prepared in accordance with HM Treasury directions made under the Government Resources and Accounts Act 2000;

• ensuring that the annual report, which includes the Remuneration and Staff Report, is prepared in accordance with HM Treasury directions made under the Government Resources and Accounts Act 2000; and

• assessing the Department and its Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Accounting Officer anticipates that the services provided by the Department and its Group will not continue to be provided in the future.

Auditor’s responsibilities for the audit of the financial statements

My responsibility is to audit, certify and report on the financial statements in accordance with the Government Resources and Accounts Act 2000.

My objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue a certificate that includes my opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Extent to which the audit was considered capable of detecting non-compliance with laws and regulations including fraud

I design procedures in line with my responsibilities, outlined above, to detect material misstatements in respect of non-compliance with laws and regulations, including fraud. The extent to which my procedures are capable of detecting non-compliance with laws and regulations, including fraud is detailed below.

Identifying and assessing potential risks related to non-compliance with laws and regulations, including fraud

In identifying and assessing risks of material misstatement in respect of non-compliance with laws and regulations, including fraud, I:

• considered the nature of the sector, control environment and operational performance including the design of the Department and its Group’s accounting policies:

• inquired of management, the Department’s head of internal audit and those charged with governance, including obtaining and reviewing supporting documentation relating to the Department and its Group’s policies and procedures on:

• identifying, evaluating and complying with laws and regulations;

• detecting and responding to the risks of fraud; and

• the internal controls established to mitigate risks related to fraud or non-compliance with laws and regulations including the Department and its Group’s controls relating to the Department’s compliance with the Government Resources and Accounts Act 2000, Managing Public Money, the Supply and Appropriation (Main Estimates) Act 2022, primary and secondary legislation which specifies the circumstances in which a Minister of the Crown may provide financial assistance to a local authority, person or charitable institution,

• and establishing legislation for bodies within the Departmental Group.

• inquired of management, the Department’s head of internal audit and those charged with governance whether:

• they were aware of any instances of non-compliance with laws and regulations;

• they had knowledge of any actual, suspected, or alleged fraud,

• discussed with the engagement team including the significant component audit team regarding how and where fraud might occur in the financial statements and any potential indicators of fraud.

As a result of these procedures, I considered the opportunities and incentives that may exist within the Department and its Group for fraud and identified the greatest potential for fraud in the following areas: revenue recognition, posting of unusual journals, complex transactions, and bias in management estimates. In common with all audits under ISAs (UK), I am required to perform specific procedures to respond to the risk of management override.

I obtained an understanding of the Department and Group’s framework of authority and other legal and regulatory frameworks in which the Department and Group operates. I focused on those laws and regulations that had a direct effect on material amounts and disclosures in the financial statements or that had a fundamental effect on the operations of the Department and its Group. The key laws and regulations I considered in this context included Government Resources and Accounts Act 2000, Managing Public Money, Supply and Appropriation (Main Estimates) Act 2022, establishing legislation for bodies within the Departmental Group, Primary and secondary legislation which specifies the circumstances in which a Minister of the Crown may provide financial assistance to a local authority, person or charitable institution, employment law, pensions legislation and tax legislation.

In addition, I considered the nature of the control environment of the Departmentand its Group and its business performance, and performed risk-based sampling of manual journals to identify those presenting higher risk of fraud, informed by a planning risk assessment and a review of the Statement of Outturn against Parliamentary Supply.

**Audit response to identified risk **

To respond to the identified risks resulting from the above procedures:

• I reviewed the financial statement disclosures and testing to supporting documentation to assess compliance with provisions of relevant laws and regulations described above as having direct effect on the financial statements;

• I enquired of management and the Audit and Risk Committee concerning actual and potential litigation and claims;

• I reviewed minutes of meetings of those charged with governance and the Board and internal audit reports;

• in addressing the risk of fraud through management override of controls, I tested the appropriateness of journal entries and other adjustments; assessed whether the judgements on estimates are indicative of a potential bias; and evaluated the business rationale of any significant transactions that are unusual or outside the normal course of business; and

• I performed analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud, and continuous risk assessment procedures were performed relating to fraud, non‑compliance with laws and regulation or regularity.

I also communicated relevant identified laws and regulations and potential risks of fraud to all engagement team members including internal specialists and the significant component audit team and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.

A further description of my responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of my certificate.

Other auditor’s responsibilities

I am required to obtain appropriate evidence sufficient to give reasonable assurance that the Statement of Outturn against Parliamentary Supply properly presents the outturn against voted Parliamentary control totals and that those totals have not been exceeded. The voted Parliamentary control totals are Departmental Expenditure Limits (Resource and Capital), Annually Managed Expenditure (Resource and Capital), Non-Budget (Resource) and Net Cash Requirement.

I am required to obtain evidence sufficient to give reasonable assurance that the expenditure and income recorded in the financial statements have been applied to the purposes intended by Parliament and the financial transactions recorded in the financial statements conform to the authorities which govern them.

I communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control I identify during my audit.

Report

I have no observations to make on these financial statements.

Gareth Davies

Comptroller and Auditor General

National Audit Office

157-197 Buckingham Palace Road

Victoria

London

SW1W 9SP

17 July 2023

1. Attendance records relate to Ministerial Board meetings. ↩

2. Joined the department after the first Board meeting in 2022-23. ↩

3. Joined the department after the first Board meeting in 2022-23. ↩

4. Joined the department after the first Board meeting in 2022-23. ↩

5. Joined the department after the first Board meeting in 2022-23. ↩ ↩² ↩³

6. Joined the Department after both Board meetings in 2022-23. ↩

7. Is not a Departmental Board member – attendance is only required when item relates to work area. ↩

8. Was not a Departmental Board member until after both Board meetings in 2022-23. ↩

9. Is not a Departmental Board member – attendance is only required when item relates to work area. ↩

10. Is not a Departmental Board member – attendance is only required when item relates to work area. ↩

11. Is not a Departmental Board member – attendance is only required when item relates to work area. ↩

12. Is not a Departmental Board member – attendance is only required when item relates to work area. ↩

13. Is not a Departmental Board member – attendance is only required when item relates to work area. ↩

14. This publication offers guidance on how to manage public funds and can be found here: Managing public money. ↩

15. The latest version of DLUHC’s AOSS can be found here: DLUHC accounting officer system statement 2023. ↩

16. This framework is for Mayoral Combined Authorities with a Single Pot funding arrangement and Local Enterprise Partnerships and can be found here: National local growth assurance framework. ↩

17. The Corporate governance in central government departments: code of good practice can be found here: Corporate governance code for central government departments 2017. ↩

18. Local Authority Capital Finance Framework: planned improvements. ↩

19. DLUHC: business appointment rules advice. ↩

20. Advisory Committee on Business Appointments. ↩

21. Partnership between departments and arm’s-length bodies. ↩

22. Arm’s length bodies sponsorship code of good practice. ↩

23. Public Bodies Review Programme. ↩

24. DLUHC’s gender pay gap report 2022. ↩

25. Supplementary Estimates 2022-23. ↩

26. Consolidated budgeting guidance 2022 to 2023. ↩

27. Supply Estimates guidance manual. ↩